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Suppose you have a firm with relatively little debt and no default risk. You decide to borrow an additional $500 on a permanent basis and

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Suppose you have a firm with relatively little debt and no default risk. You decide to borrow an additional $500 on a permanent basis and repurchase shares. The corporate tax rate is 20%. The expanded balance sheet before the issue of additional debt (based on the market values of securities) is: Long-term Assets $5,000 Long-term Debt $1,000 Equity $4,000 Total Assets $5,000 Total Value $5,000 What is the new stock price after debt issuance and stock repurchase if the firm had 100 shares before the repurchase

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