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*I have already solved A and B. Just having trouble with C. Here are book- and market-value balance sheets of the United Frypan Company: Book-Value
*I have already solved A and B. Just having trouble with C.
Here are book- and market-value balance sheets of the United Frypan Company:
Book-Value Balance Sheet Net working capital $ 80 Debt $ 55 Long-term assets 20 Equity 45 $ 100 $ 100
Market-Value Balance Sheet Net working capital $ 80 Debt $ 55 Long-term assets 145 Equity 170 $ 225 $ 225
Assume that MM's theory holds except for taxes. There is no growth, and the $55 of debt is expected to be permanent. Assume a 37% corporate tax rate.
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