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2. Firm ABC has 20 million shares outstanding at a price of $40/share. They currently have no debt outstanding. a. What does ABC's market
2. Firm ABC has 20 million shares outstanding at a price of $40/share. They currently have no debt outstanding. a. What does ABC's market value balance sheet look like? b. ABC decides to raise money by issuing $200 million of bonds. Assume that this transaction has no impact on the equity value. What will the market value balance sheet look like after the transaction? What will be the effect of the transaction on the accounting balance sheet? c. Explain each change in the market value balance sheet due to the debt issuance.
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