Question: Look back at the Merck example in Section 18-1 . Suppose Merck increases its long-term debt to $10 billion. It uses the additional debt to

Look back at the Merck example in Section 18-1 . Suppose Merck increases its long-term debt to $10 billion. It uses the additional debt to repurchase shares. Reconstruct Table 18.3 ( b )

with the new capital structure. How much additional value is added for Merck shareholders if the table’s assumptions are correct?

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