Lighter Industrial Corporation (LIC) is considering a large-scale recapitaliza tion. Currently, LIC is financed with 25%
Posted: Mon Mar 21, 2022 4:36 pm
Lighter Industrial Corporation (LIC) is considering a
large-scale recapitaliza tion. Currently, LIC is financed with 25%
debt and 75% equity. LIC is con sidering increasing its level of
debt until it is financed with 60% debt and 40% equity. The beta on
its common stock at the current level of debt is 1.5, the risk-free
rate is 6%, the market risk premium is 4%, and LIC faces a 40%
federal plus-state tax rate.
large-scale recapitaliza tion. Currently, LIC is financed with 25%
debt and 75% equity. LIC is con sidering increasing its level of
debt until it is financed with 60% debt and 40% equity. The beta on
its common stock at the current level of debt is 1.5, the risk-free
rate is 6%, the market risk premium is 4%, and LIC faces a 40%
federal plus-state tax rate.