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What value will Mikos have after the recapitalisation

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Question - 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 non-maturing debt issue at a 10% annual interest rate.  Mikos is subject to a 30% 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: EM133057187

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