ABC Corporation is unleveled and is valued at $640,000

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assume you are in a perfect market. ABC Corporation is unleveled and is valued at $640,000. ABC is currently deciding whether including debt in their capital structure would increase their value. ABC would repurchase $300,000 of stock with the proceeds of the debt issue. There are currently 32000 shares outstanding and their effective marginal tax bracket is zero. What will the firm value be after the change? And what will the share price be and how many shares will be outstanding after the change?

    • 13 years ago
    ABC Corporation is unleveled and is valued at $640,000
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