Question two Bombay Company's book and market value balance sheets are as follows :" INWC = net working capital ; LTA = long term assets ; D = debt ; E = equity ; V = firm value ) : Book Values Market Values NWC 200 500 D NING 200 500 D LTA 2, 300 2,000 F LTA 2. 500 E 2.500 2.500 V 3, 000 3, 000 According to MM's Proposition I incorporating corporate taxes , What will be the change In company value If Bombay Issues $200 of equity and uses it to make a permanent reduction in the company's debt ? Assume a 35 percent marginal corporate tax rate . 3 marks 200 . 35 = - 70