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What value will mikos have after the recapitalisation

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Problem 1: Application of M&M Proposition 2 Mikos Processed Foods is currently valued at $500 million. Mikos will be repurchasing $100 million of its equity by issuing a nonmaturing debt issue at a 10 per cent annual interest rate. Mikos is subject to a 30 per cent company tax rate. Given all of the Modigliani and Miller assumptions, except the assumption that there is no tax, what value will Mikos have after the recapitalisation?

Reference no: EM132959353

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