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A company is exploring adding debt to help boost its stock price. The company has 5 million shares outstanding with a market price of $10
A company is exploring adding debt to help boost its stock price. The company has 5 million shares outstanding with a market price of $10 per share and right now has zero debt. Earnings are stable and the company pays a 35% tax rate. They are considering borrowing $20 million on a permanent basis to repurchase shares. What will the new value of the company be, and the new price per share?
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