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Consider a firm with a leverage ratio (assets/equity) of 4. The firm's after-tax operating income is $120,000 and its return on assets is 15%. The
Consider a firm with a leverage ratio (assets/equity) of 4. The firm's after-tax operating income is $120,000 and its return on assets is 15%. The book value of the firm's assets is $800,000. The value of selling the firm's assets in secondhand markets is $710,000. What is the firm's liquidation value?
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