Home Page | My CF X Grades for Vicky Constable: 2022 x Question 5 - Chapter 6 Problems X Course Hero X C My folder X + V X -> C A ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252FIms.mheducation.com%252Fmghmiddleware%252Fmheprodu... * 0 V Paused FLVS Login Gradebook M Gmail YouTube Maps Home Page | My CF New Tab Chapter 6 Problems i Saved Help Save & Exit Submit Check my work 5 An all-equity business has 155 million shares outstanding selling for $20 a share. Management believes that interest rates are unreasonably low and decides to execute a leveraged recapitalization (a recap). It will raise $1 billion in debt and repurchase 50 million shares 20 points a. What is the market value of the firm prior to the recap? What is the market value of equity? Note: Enter your answers in billions rounded to 1 decimal place. Book Market value of the firm billion Market value of equity billion Ask References b. Assuming the Irrelevance Proposition holds, what is the market value of the firm after the recap? What is the market value of equity? Note: Enter your answers in billions rounded to 2 decimal places. Market value of the firm billion Market value of equity billion d. Assume now that the recap increases total firm cash flows, which adds $210 million to the value of the firm. Now what is the market value of the firm? What is the market value of equity? Note: Enter your answers in billions rounded to 1 decimal place. Market value of the firm billion Market value of equity billion Mc 86F W 6:03 PM Partly sunny 9/23/2022 2