Question: All else being equal, if a firm issues $100 million in 10% bonds and uses the proceeds to repurchase common stock that pays dividends of

All else being equal, if a firm issues $100 million in 10% bonds and uses the proceeds to repurchase common stock that pays dividends of $10 million per year, all of the following will occur, except:

1)income taxes will decrease

2) net income will decrease

3)interest expense will increase

4)net cash available for other needs will decrease

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