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What will be the value of the firm after the debt issue

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Maynes Corporation is currently all equity financed and has a value of $90 million. Investors currently require a return of 18.9 percent on common stock. Maynes has a marginal tax rate of 20 percent. Maynes plans to issue $25 million of debt with a return of 6.2 percent and use the proceeds to repurchase common stock.

What will be the value of the firm after the debt issue? 95 million

Given that the value of the firm after the debt issue will be $95 million, what will be the value of the equity after the debt issue? Please state your answer in millions rounded to two decimal places. 70 million

Given that the value of the equity after the debt issue will be $70 million, what will be the expected return on the stock after the debt issue?

Reference no: EM133060766

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