In 2012, Intel Corporation had a market capitalization of $121 billion, debt of $7.2 billion, cash of

Question:

In 2012, Intel had a market capitalization of $121 billion, debt of $7.2 billion, cash of $14.7 billion, and EBIT of nearly $18 billion. If Intel were to increase its debt by $1 billion and use the cash for a share repurchase, which market imperfections would be most relevant for understanding the consequence for Intel’s value? Why?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...