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What would be the total value of firm a

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Reference no: EM132797374

Firm A is currently 100% equity financed, and it has the following balance sheet:
Assets           Debt

100,000              0

                    Equity

                  100,000

problem 1: Suppose Firm A wants to invest in a project that has total present value equal to $50,000. Using MM propositions with taxes, and assuming that the corporate tax rate is 40%, what would be the total value of Firm A (value of assets) if it used equity to finance the project?

Reference no: EM132797374

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