M&M. Offspring Corporation has no debt. Its current total value is $160 million.
Ignoring taxes, what will Offspring's value be if it sells $50 million in debt? Suppose
now that Offspring's tax rate is 40 percent. What will its overall value be if it sells
$50 million in debt? Assume debt proceeds are used to repurchase equity.
Current Toatl value of Equity = $160 milliom
Issues debt for $50 million and ...