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Assume the MM (1958) theory holds. Corner Store is financed solely by common stock and has 20 million shares outstanding with a market price of

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Assume the MM (1958) theory holds. Corner Store is financed solely by common stock and has 20 million shares outstanding with a market price of $10 a share. It now announces it intends to issue $84 million of debt and use the proceeds to buy back common stock. What is the debt-to-equity ratio after the change in capital structure? 0.72 0.42 1.22 1.72

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