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10.12. [1999 Sample 2:54] The value of a currently all-equity firm is 200. The firm converts some of its equity to debt at 6%, changing

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10.12. [1999 Sample 2:54] The value of a currently all-equity firm is 200. The firm converts some of its equity to debt at 6%, changing the debt-to-equity ratio of the firm to 025. The corporate income tax rate is 35% If you ignore personal taxes and any costs of financial distress, what is the new value of the firm after the conversion? (A) 741 (B) 745 (C) 749 (D) 753 (E) 757

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