Suppose Kohwe borrows the $50 million instead. The firm will pay interest only on this loan each

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Suppose Kohwe borrows the $50 million instead. The firm will pay interest only on this loan each year, and it will maintain an outstanding balance of $50 million on the loan. Suppose that Kohwe’s corporate tax rate is 25%, and expected free cash flows are still $10 million each year. What is Kohwe’s share price today if the investment is financed with debt?

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Fundamentals Of Corporate Finance

ISBN: 9780135811603

5th Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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