Neal Enterprises has no debt. Its current total value is $73.6 million. Assume debt proceeds are used to repurchase equity.
Requirement 1:
Ignoring taxes, what will the company’s value be if it sells $33.8 million in debt? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)
Value of the firm: ?
Requirement 2:
Suppose now that the company’s tax rate is 36 percent. What will its overall value be if it sells $33.8 million in debt? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)
Value of the firm: ?