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A . An all - equity firm that pays a 2 4 % corporate income tax has 3 5 0 , 0 0 0 shares
A An allequity firm that pays a corporate income tax has shares outstanding, a cost of capital of and generates perpetual annual EBIT of $ Million. According to the M&M theories of capital structure, what is the unlevered firms stock price per share? Note that you may ignore any impact of personal taxes. The firm in problem A plans to borrow $ Million at annual interest to retire some equity. According to the M&M theories, after the recapitalization, what would be the levered firms stock price per share?
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