Creative Inc. is an unlevered firm valued at $1,500,000. The firm wants to borrow $500,000...
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Creative Inc. is an unlevered firm valued at $1,500,000. The firm wants to borrow $500,000 (perpetual debt) and use the proceeds to repurchase shares. The cost of debt is 8% and the corporate tax rate is 40%. What will be the value of the firm after the change in capital structure
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