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What is the decrease in the value of the company

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Problem - Hominy, Inc., has debt outstanding with a face value of $5 million. The value of the firm if it were entirely financed by equity would be $18.4 million. The company also has 470,000 shares of stock outstanding that sell at a price of $29 per share. The corporate tax rate is 21 percent. What is the decrease in the value of the company due to expected bankruptcy costs?

Reference no: EM133039810

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