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An all-equity firm consists of a single project that will produce a perpetual cash flow of either $100M (good state) or $30M (bad state) next

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An all-equity firm consists of a single project that will produce a perpetual cash flow of either $100M (good state) or $30M (bad state) next year. The probability of the good state is 30%. The beta of the asset cash flows is 1.25 and the risk-free rate is 3 percent and the market risk premium is 8 percent. There are 6M shares outstanding. Suppose the manager claims that the cash flows are high and issues $50M in perpetual debt. The debt has an interest rate of 8 percent. Following the debt issuance and managerial claim, what are the values of the firm's assets and share price? O 57.05 65.38 119.87

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