The debt-the equity and the total value of the firm

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In a world with no taxes, a firm has 30M shares trading at a market price of 15€ per share, and debt with a market value of 104 M€.

1. Draw the balance sheet of this company including the assets, the debt, the equity, and the total value of the firm.

2. The company decides to issue new debt to repurchase 1 M shares. Draw the balance sheet of the company after this transaction. Compare the value of debt, the value of equity and total firm vale before and after the transaction.

Reference no: EM133272516

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