Assume debt proceeds are used to repurchase equity

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Neal Enterprises has no debt. Its current total value is $73.6 million. Assume debt proceeds are used to repurchase equity.

Requirement 1:

Ignoring taxes, what will the company’s value be if it sells $33.8 million in debt? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)

Value of the firm: ?

Requirement 2:

Suppose now that the company’s tax rate is 36 percent. What will its overall value be if it sells $33.8 million in debt? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)

Value of the firm: ?

Reference no: EM131897755

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