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calculate the market value of yhe firms (i)debt and (ii) equity immediately after the refinancing plan is announced (but before it is actually executed) Question
calculate the market value of yhe firms (i)debt and (ii) equity immediately after the refinancing plan is announced (but before it is actually executed)
Question 8 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% Step by Step Solution
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