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An all-equity company currently valued at $4,500,000 can borrow at 6.75%. The company is considering borrowing $1,750,000, which would be used to buy back shares.
An all-equity company currently valued at $4,500,000 can borrow at 6.75%. The company is considering borrowing $1,750,000, which would be used to buy back shares. Assume all available earnings are immediately distributed to common shareholders and all the M&M assumptions are satisfied except the company's corporate tax rate is 16%. According to the M&M Propositions with taxes, what will be the value of this company after the proposed capital restructing?
round final answer to 2 decimals
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