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Memphic Memphic
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6 years ago
Assume that capital markets are perfect except for the existence of corporate taxes.  Your firm pays 40% of earnings in taxes and you decide to issue $25 million in new debt and $25 million in new equity.  Your ownership stake in the firm following these new issues of debt and equity is closest to:
A) 58%
B) 55%
C) 33%
D) 50%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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EgorGruzdevEgorGruzdev
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6 years ago
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