Assume That AJC Is Considering Changing from Its Original Capital

question 13

Multiple Choice

assume that AJC is considering changing from its original capital structure to a new capital structure that results in a stock price of $64 per share The resulting capital structure would have a $336,000 total market value of equity and a $504,000 market value of debt How many shares would AJC repurchase in the recapitalization?

• A) 4,250
• B) 4,500
• C) 4,750
• D) 5,000
• E) 5,250

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Definitions:

Output

The total amount of goods or services produced by a company, industry, or economy.

Prospective Sunk Costs

Future costs that, once incurred, cannot be recovered and should not influence current decision-making processes.

Economic Decision-Making

The process of choosing among alternatives to maximize outcomes based on objectives and constraints.

Investment Decisions

The process of choosing where to allocate resources among various options to generate returns over a certain period.