The Nantucket Nugget is unlevered and is valued at $640,000. Nantucket is currently deciding whether including debt in i
Posted: Wed Mar 16, 2022 9:12 am
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.
$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.