Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Jordan, Corp., has debt outstanding with a market value of $3 million. The value of the firm would be $X million
if it were entirely financed by equity. The company also has 360,000 shares of stock outstanding that sell at
$50 per share. The corporate tax rate is 30 percent. The expected bankruptcy cost is 0.9 million. If there is no
other market friction like agency cost/benefit, what is X?
$19.2 million
O $21 million
O $5.7 million
O $20.1 million
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Transcribed Image Text:Jordan, Corp., has debt outstanding with a market value of $3 million. The value of the firm would be $X million if it were entirely financed by equity. The company also has 360,000 shares of stock outstanding that sell at $50 per share. The corporate tax rate is 30 percent. The expected bankruptcy cost is 0.9 million. If there is no other market friction like agency cost/benefit, what is X? $19.2 million O $21 million O $5.7 million O $20.1 million
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