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What will be the overall value for given debt

Problem:

M&M. Offspring Corporation has no debt. Its current total value is $160 million. Ignoring taxes, what will Offspring's value be if it sells $50 million in debt? Suppose now that Offspring's tax rate is 40 percent. What will its overall value be if it sells $50 million in debt? Assume debt proceeds are used to repurchase equity.

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Finance Basics: What will be the overall value for given debt

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