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EpiscoWhat EpiscoWhat
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6 years ago
Suppose the risk-free interest rate is 4%.  If Nielson borrows $150 million today at this rate and uses the proceeds to pay an immediate cash dividend, then according to MM, the market value of its equity just after the dividend is paid would be closest to:
A) $0 million
B) $150 million
C) $250 million
D) $400 million
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Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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wrote...
6 years ago
C
Explanation:  C) Value of equity = Total value - value of debt = $400 - 150 = $250
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