Problem and strategy

timer Asked: Nov 9th, 2015

Question description

McDonalds needs to raise 1 billion to expand to africa. Determine whether they should have used all debt, stock or 50/50 combination of both to finance this market development strategy. Assume 38% tax rate, 5% interest rate, mcdonalds stock price of $50 per share, and an annual dividend of $0.30 per share of common stock. The EBIT 2010 is between $6.332 billion and $9 billion. A total of 1 billion shares of common stock are outstanding. Develop an EPS/EBIT chart to reflect your analysis. 

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