Shoe box stores is currently an all-equity firm with 25,000 shares of stock outstanding. Management is considering changing the capital structure to 35% debt. The interest rate on the debt would be 8%. Ignore taxes. Jamie owns 600 shares of Shoe Box Stores stock that is priced at $22 a share. What should Jamie do if she prefers the all-equity structure but Shoe Box Stores adopts the new capital structure?
Jamie should sell 210 shares... View the full answer