Question: second time posting, please help finding correct answer for part D thank you! An all-equity business has 135 million shares outstanding selling for $20 a

second time posting, please help finding correct answer for part D

thank you!

second time posting, please help finding correct answer for part D thank you! An all-equity business has 135 million shares outstanding selling for $20

An all-equity business has 135 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. a. What is the market value of the firm prior to the recap? What is the market value of equity? (Enter your answers in billions rounded to 1 decimal place.) Answer is complete and correct. Market value of the firm $ 2.7 billion Market value of equity $ 2.7 billion b. Assuming the Irrelevance Proposition holds, what is the market value of the firm after the recap? What is the market value of equity? (Enter your answers in billions rounded to 1 decimal place.) Answer is complete and correct. $ 2.7 billion Market value of the firm Market value of equity $ 1.7 billion b. Assuming the Irrelevance Proposition holds, what is the market value of the firm after the recap? What is the market value of equity? (Enter your answers in billions rounded to 1 decimal place.) Answer is complete and correct. $ Market value of the firm Market value of equity 2.7 billion 1.7 billion $ d. Assume now that the recap increases total firm cash flo which adds $170 million to the value of the firm. Now what is the market value of the firm? What is the market value of equity? (Enter your answers in billions rounded to 2 decimal places.) Answer is not complete. billion Market value of the firm Market value of equity billion

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