# Overnight Publishing Company (OPC) has $2.1 million in

a. hat is the value of OPC if it chooses to retire all of its debt and become an unlevered firm? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)

b. What is the value of OPC if it decides to repurchase stock instead of retiring its debt? (Hint: Use the equation for the value of a levered firm with personal tax on interest income from Problem 9 in the textbook.) (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)

c. What is the value of OPC if the expected bankruptcy costs have a present value of $675,000? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)

**Related Book For**

Corporate Finance

10th edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

ISBN: 978-0077861759

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