b

Questions A firm currently has equity with a market value of $500,000,000 and debt with a market value of $500,000,000. The firm has 10,000,000 shares outstanding. The bonds offer investors a return of 8%. The firm is contemplating issuing $250,000,000 in new equity and using the proceeds to repurchase $250,000,000 of the firm's debt. The corporate tax rate is 35%, the effective personal tax rate on equity income is 10% and the effective personal tax rate on interest income is 20% s. 24+ JU OLUB-1 +0-1+04+ 3 + 4/81 ( b) How many shares will the firm issue