King, Inc., has debt outstanding with a face value of $4.3 million. The value of the firm
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King, Inc., has debt outstanding with a face value of $4.3 million. The value of the firm if it were entirely financed by equity would be $17.9 million. The company also has 320,000 shares of stock outstanding that sell at a price of $44 per share. The corporate tax rate is 21 percent. What is the decrease in the value of the company due to expected bankruptcy costs?
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Related Book For
Corporate Finance
ISBN: 9781260772388
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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