Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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F2
Transcribed Image Text:A company is currently all-equity financed. It
has 50,000 shares of equity outstanding,
selling at $20 per share. It plans to issue
$300,000 of perpetual debt and buy back
stock. What will be the total value of the
remaining stock if the firm's tax rate is 40
percent?
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