Company has debt outstanding with face value

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Your company has debt outstanding with a face value of 6 million dollars. The value of your firm, if entirely financed by equity, would be $17.85 million. The company also has 350,000 shares of stock in circulation and trading at a price of $38 per share of. The corporate tax rate is 35%. You notice that the value of your enterprise predicted by Modigliani and Miller Proposition I with Taxes differs from the total market value of claims (debt and equity) in circulation. What explains this difference? information costs. expected costs of financial distress. agency costs. Any of these answers may be correct.

Reference no: EM132071480

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