Use the Following Information to Answer the Question(s)below

question 5

Multiple Choice

Use the following information to answer the question(s) below.
Galt Industries has 50 million shares outstanding and a market capitalization of $1.25 billion.It also has $750 million in debt outstanding.Galt Industries has decided to delever the firm by issuing new equity and completely repaying all the outstanding debt.Assume perfect capital markets.
-Suppose you are a shareholder in Galt industries holding 600 shares,and you disagree with this decision to delever the firm.You can undo the effect of this decision by:

• A)borrowing $6000 and buying 240 shares of stock.
• B)selling 240 shares of stock and lending $6000.
• C)borrowing $9000 and buying 360 shares of stock.
• D)selling 360 shares of stock and lending $9000.

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Definitions:

Technological Advances

Refers to the progress in technology which enhances productivity, efficiency, and innovation in various fields.

Government Regulation

Legal provisions enforced by governmental bodies to control and guide the behavior of businesses and individuals.

General Journal

The most basic form of journal.

Subsidiary Ledger

A Subsidiary Ledger is a set of accounts that provides detailed information to support a general ledger account, such as detailed customer or vendor transactions supporting the accounts receivable or payable balances.