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(c) Econsave has debt outstanding with a face value of RM4.5 million. The value of the firm if it entirely financed by equity, would be

(c) Econsave has debt outstanding with a face value of RM4.5 million. The value of the firm if it entirely financed by equity, would be RM18.3 million. The company also has 340,000 shares of outstanding that sell for RM 41 per share. The corporate tax rate is 21 per cent. What is the decrease in the value of the company due to expected bankruptcy costs? (11 marks) [Total: 30 marks]

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