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Landry Corp.is looking at two possible capital structures.Currently,the firm is an all-equity firm with $1.2 million dollars in assets and 200,000 shares outstanding.The market value of each stock is $6.00.The CEO of Landry is thinking of leveraging the firm by selling $600,000 of debt financing and retiring 100,000 shares,leaving 100,000 outstanding.The cost of debt is 10% annually,and the current corporate tax rate for Landry is 30%.If the CEO believes that Landry's EBIT will be $120,000,should the CEO leverage the firm? Explain.
Skinner
B.F. Skinner was a psychologist and behaviorist who developed theories of operant conditioning and introduced the concept of reinforcement.
Skinner Box
An experimental device used in behavior analysis to study animal behavior, particularly the effects of reinforcements on behavior.
Cognitive Learning
The acquisition of knowledge and understanding through thought, experience, and the senses.
Social Learning
Social learning is a theory that suggests people can learn new behaviors and information by observing others.
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