A firm is all equity with 5,000 shares outstanding worth $7 each. They are planning on issuing $10,000 of new perpetual debt at the 8% market rate of interest. The effective tax rate is 25%. What is the change in equity value if they make the debt for equity exchange?
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A firm is all equity with 5,000 shares outstanding worth $7 each. They are planning on issuing $10,0...
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