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Hi Sir ..
can you tell me and show me the working step on finding the debt/equity ratio after the redemption of loan notes . Under the answer B) last paragraph .
I have thinking this solution for more than half hour .. still cant get it .. ??
After redeeming the loan notes, there will be 4M extra shares with a nominal value of 50c and a market value of $3.11.
There will also be $10M less loan notes (at nominal value) leaving $20M, with a market value of 20 x 1.04 = $20.8M
So the debt equity ratio on book values = 20 / (12 + 75) = 23% (the answer is slightly wrong there).
On market values it is: 20.8 / (24 x 3.11) = 28%
Thx you sir ! Finally i got the solution !
You are welcome 🙂