M&M Proposition 1: If Dynamo Wishes to Change Its Capital

question 3

Multiple Choice

M&M Proposition 1: If Dynamo wishes to change its capital structure from 75 percent to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they issue?

• A) $321
• B) $375
• C) $600
• D) $225

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