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Pinder Co operates under the assumptions of Modigliani and Miller, with the only exception that there are corporate taxes of 40%. Pinder Co is considering
Pinder Co operates under the assumptions of Modigliani and Miller, with the only exception that there are corporate taxes of 40%. Pinder Co is considering issuing $800 million in perpetual corporate bonds with an interest rate of 5%, and using those proceeds to repurchase shares. If Pinder Co goes through with this plan, how much would the value of Pinder Co as a whole increase by?
a)$280 million
b)$310 million
c)$340 million
d)None of the other answers are correct.
e)$370 million
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