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QUESTION
Neal Enterprises has no debt. Its current total value is $45 million. Ignoring taxes, what will the company's value be if it sells $16 million in
Neal Enterprises has no debt. Its current total value is $45 million. Ignoring taxes, what will the company's value be if it sells $16 million in debt? Suppose now that the company's tax rate is 40 percent. What will its overall value be if it sells $16 million in debt? Assume debt proceeds are used to repurchase equity.
