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Parthanon Inc., is a candidate for an LBO. The company currently has no debt, and is estimated to be worth $450M. The company intends to
Parthanon Inc., is a candidate for an LBO. The company currently has no debt, and is estimated to be worth $450M. The company intends to issue bonds worth $360M in perpetuity, using the proceeds to repurchase stock. If the company expects to pay taxes at 25%, estimate the value of the levered firm after the LBO transaction. (Ignore financial distress implications and any personal tax implications.)
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