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Seattle Health Plans currently uses zero - debt financing. Its operating profit is $ 2 million, and it pays taxes at a 2 3 percent
Seattle Health Plans currently uses zerodebt financing. Its operating profit is $ million, and it pays taxes at a percent rate. It has $ million in assets and, because it is allequity financed, $ million in equity. Suppose the firm is considering replacing percent of its equity financing with debt financing that bears an interest rate of percent.
What impact would the new capital structure have on the firm's profit?
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