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Debt Irrelevance. River Cruises (see Section 16.1) is all-equity-financed with 50,000 shares. It now proposes to issue $250,000 of bonds and use the proceeds to
Debt Irrelevance. River Cruises (see Section 16.1) is all-equity-financed with 50,000 shares. It now proposes to issue $250,000 of bonds and use the proceeds to repurchase 25,000 shares. Suppose an investor currently holds 500 shares in the company but is unhappy with its decision to borrow $250,000. Which of the following modifications to her own investment portfolio would offset the effects of the firms additional borrowing? (LO16-1) a. Borrow $250 on her own account and use the cash to buy additional
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