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The value of firm is equal to value of debt plus value of equity. Assume the firm has 4 million shares outstanding currently selling at

The value of firm is equal to value of debt plus value of equity. Assume the firm has

4

million shares outstanding currently selling at $

25

per share, and it decides to issue

50

million in debt to repurchase

2

million shares, how would this affect the value before

/

after

.

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