Prescott Inc. has the following data regarding its financial structure: Market value of outstanding debt: $7,000,000 Value
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Prescott Inc. has the following data regarding its financial structure:
Market value of outstanding debt: | $7,000,000 |
Value of firm if financed with all equity: | $18,850,000 |
Number of shares outstanding: | 350,000 |
Current price per share: | $38.00 |
Tax rate: | 30 % |
What is the decrease in firm value due to expected bankruptcy costs? (Show work )
Related Book For
Intermediate Financial Management
ISBN: 9780357516669
14th Edition
Authors: Eugene F Brigham, Phillip R Daves
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