Question
BBC is an all equity-financed firm and its firm value is $190,824. It plans to borrow $83,935 perpetual debt at 6% to buy back shares.
BBC is an all equity-financed firm and its firm value is $190,824. It plans to borrow $83,935 perpetual debt at 6% to buy back shares. The corporate tax rate is 35%. If the present value of financial distress costs associated with the debt financing is $22,221, what is the firm value after the recapitalization?
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Corporation Finance Volume 2 Of 2
Authors: Hastings Lyon
1st Edition
124008997X, 9781240089970
