Refer to Exhibit 15

question 53

Multiple Choice

Refer to Exhibit 15.4.Now 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:

Asset

An economic resource owned or controlled by an individual or business, expected to provide future economic benefits.

Depreciation Expense

An accounting method of allocating the cost of a tangible or physical asset over its useful life.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use, reducing its book value.

Fiscal Period

A fiscal period is the time frame used by governments and businesses for accounting purposes and preparing financial statements, typically a year, quarter, or month.