7. debt irrelevance. digital fruit is financed solely by common stock and has outstanding 25 million shares with a market price of $10 a share. it now announces that it intends to issue $160 million of debt and to use the proceeds to buy back common stock. there are no taxes. (lo16-1) a. what is the expected market price of the common stock after the announcement? b. how many shares can the company buy back with the $160 million of new debt that it will issue? c. what is the market value of the firm (equity plus debt) after the change in capital structure? d. what is the debt ratio after the change in capital structure?

If the ceo of a large, diversified, firm were filling out a fitness report on a division manager (i. e., "grading" the manager), which of the following situations would be likely to cause the manager to receive a better grade? in all cases, assume that other things are held constant. a. the division's basic earning power ratio is above the average of other firms in its industry. b. the division's total assets turnover ratio is below the average for other firms in its industry. c. the division's debt ratio is above the average for other firms in the industry. d. the division's inventory turnover is 6, whereas the average for its competitors is 8.e. the division's dso (days' sales outstanding) is 40, whereas the average for its competitors is 30.