Zacks inc an all-equity firm is subject to a 30 corporate, Ask an Expert

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Zack's Inc., an all-equity firm, is subject to a 30% corporate tax rate. Its equityholders require a 20% return. The firm's market value now is $3,500,000, and there are 175,000 shares outstanding. Suppose the firm issues $1 million of bonds at 10% and uses the proceeds to repurchase common stock. What is the market value of equity of the firm after the debt issue?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92055090

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