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Infinity Inc. is considering increasing the proportion of debt from (current) 29% to 78% in its capital structure. The corporate tax rate of the company
Infinity Inc. is considering increasing the proportion of debt from (current) 29% to 78% in its capital structure. The corporate tax rate of the company is 35%. If the firm does recapitalize, keeping in view the MM propositions, then (i) explain what would be the probable impact of this recapitalization on the firm's existing creditors and stockholders? (ii) Ignoringfinancial distress cost, indicatethe probable impact of the restructuring on the firm's value
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