Rayburn Manufacturing is currently an all-equity firm. The firm”s equity is worth $2 million. The…


Rayburn Manufacturing is currently an all-equity immovable. The immovable’s equity is price $2 darling. The require of that equity is 18 percent. Rayburn pays no taxes. Rayburn plans to upshot $400,000 in claim and to use the allowance to satisfy hoard. The require of claim is 10 percent.

a. After Rayburn satisfys the hoard, what procure the immovable’s overall require of principal be?

b. After the satisfy, what procure the require of equity be?

c. Explain your end in (b).