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Consider the Yy Company in a world that of perfect capital markets. This world has no personal taxes, all investors have homogeneous expectations, no bankruptcy
Consider the Yy Company in a world that of perfect capital markets. This world has no personal taxes, all investors have homogeneous expectations, no bankruptcy costs, and M&Ms with no-tax theory of capital structure is true. The Company Yy is financed has the following market value balance sheet: Assets = $ 210, Equity =$143, and the remainder of the firm is financed with Debt. Now the firm repurchases half of the equity. To pay for the repurchase, the firm issues debt. What is the new value off the firm?
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