What is the decrease in firm value

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A company has the following data regarding its financial structure:

Market value of outstanding debt:$2,500,000

Value of firm if financed with all equity: $14,450,000

Number of shares outstanding:250,000

Current price per share: $38.00

Tax rate: 38 %

What is the decrease in firm value due to expected bankruptcy costs?

Reference no: EM132406547

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