Question two Bombay Company's book and market value balance sheets are as follows : INWC = net working capital ; LTA = long term assets ; D =...

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assume a 35 percent marginal corporate tax rate

Question twoBombay Company's book and market value balance sheets are as follows :"INWC = net working capital ; LTA = long term assets ; D = debt ; E = equity ; V = firm value ) :Book ValuesMarket ValuesNWC200500DNING200500DLTA2, 3002,000FLTA2. 500E2.5002.500V3, 0003, 000According to MM's Proposition I incorporating corporate taxes , What will be the change In company value If Bombay Issues $200of equity and uses it to make a permanent reduction in the company's debt ? Assume a 35 percent marginal corporate tax rate .3 marks200 . 35 = - 70.