Continuing with the numbers from the previous question, compute new value of the firm's levered equity, , after the following actions by the firm's management:
Management issues additional pure-discount debt which has a promised payment of X'=621 at T=3 and has the same priority as the firm's original debt. The firm receives total proceeds of 500 for the new debt. Management uses the proceeds to double the firm's operations under identical conditions, such that V=1,000, =1,500, and =666.67.
a. 217.3
b. 258.3
c. 298.3
d. 338.3
FORMULAS: ; EL = ;
B
Business
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The term "safeguard" refers to the relinquishment of an obligation owed by another
Indicate whether the statement is true or false
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