Assume the marginal corporate tax rate is 21 percent. The firm has no debt in its capital structure. It is valued at $100 million. What would be the value of the firm if it issued $50 million in perpetual debt and repurchased the same amount of equity?
A) $65 million
B) $110.5 million
C) $100 million
D) $150 million
Correct Answer:
Verified
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