The Nantucket Nugget is unlevered and is valued at $640,000. Nantucket is currently deciding whether including debt in i

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answerhappygod
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The Nantucket Nugget is unlevered and is valued at $640,000. Nantucket is currently deciding whether including debt in i

Post by answerhappygod »

The Nantucket Nugget is unlevered and is valued at
$640,000. Nantucket is currently deciding whether including debt in
its capital structure would increase its value. The current cost of
equity is 12%. Under consideration is issuing $300,000 in new debt
with an 8% interest rate. Nantucket would repurchase $300,000 of
stock with the proceeds of the debt issue. There are currently
32,000 shares outstanding.
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