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On Slide 41, we saw when the company issues debt, the market value of existing shareholders' equity is 140. A former student thought this was
On Slide 41, we saw when the company issues debt, the market value of existing shareholders' equity is 140. A former student thought this was inconsistent with slide 49 because, based on slide 49, the marker value of existing shareholders' equity should be 176/1.2 = 211.2. What's wrong with this logic? The discount rate is incorrect. The expected cash flow is incorrect. Group of answer choices I and II only I something else only
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