Epiphany Is an All-Equity Firm with an Estimated Market Value

question 72

Multiple Choice

Epiphany is an all-equity firm with an estimated market value of $300 000. The firm sells $100 000 of debt and uses the proceeds to purchase outstanding equity. Compute the weight in equity and the weight in debt after the proposed financing and repurchase of equity.

• A)0.2, 0.8
• B)0.67, 0.33
• C)0.25, 0.75
• D)0.5, 0.5

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Definitions:

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A set of conventional rules and manners that govern social behavior and interactions.

"You" Attitude

A communication approach that focuses on the audience or recipient, emphasizing their interests and needs.

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The ability to recognize, understand, and manage one's own emotions and the emotions of others.

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