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Please answer both questions thank you so much :) QUESTION 1 A firm (which does not pay taxes) is borrowing $100m of debt with a
Please answer both questions thank you so much :)
QUESTION 1 A firm (which does not pay taxes) is borrowing $100m of debt with a 4% yield and will have $300m in equity after. The total firm value will be $400m. The cost of equity is 12% before borrowing of debt, what will the new cost of equity be after? 20.00% 13.47% 2.67% 14.67% QUESTION 2 Which of the following is FALSE? The right to file bankruptcy has strategic value Chapter 11 bankruptcy is reorganizing the capital structure of a firm. Insolvency is the inability to meet obligations Chapter 7 bankruptcy is reorganizing the capital structure of a firmStep by Step Solution
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