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F is a levered firm, with a systematic risk of equity, S, of 1.6 and...

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Finance

F is a levered firm, with a systematic risk of equity, S, of 1.6 and risk-free debt with market value $1,200,000. F decides to issue $1,100,000 in equity and use the proceeds to entirely repay its debt. Following the operation, Fs equity goes down to 0.5. Compute the equity value before and after the operation.

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