To have a 5:1 debt/equity ratio with $600 million in overall value, the firm needs to have

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To have a 5:1 debt/equity ratio with $600 million in overall value, the firm needs to have $500 million in debt and $100 million in equity. One way to accomplish this is to issue $250 million in debt and repurchase

$150 million in equity. (New firm size = $250 debt + $250 debt + $250 equity − $150 equity = $600 total.)

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Corporate Finance An Introduction

ISBN: 9780321277992

1st Edition

Authors: Ivo Welch

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Question Posted: Oct 26, 2024 04:03 AM

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To have a 5:1 debt/equity ratio with $600 million in overall value, the firm needs to have

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Corporate Finance An Introduction

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