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Assuming the irrelevance proposition holds what is the

An all-equiry business has 175M shares outstanding selling for $20/share. Management believes interest rates are unreasonably low and decides to execute a leveraged recapitalization. It will raise $1B in debt and repurchase 50M shares.

Assuming the Irrelevance Proposition holds, what is the market value of the company after the recap and what is the market value of the equity?

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Finance Basics: Assuming the irrelevance proposition holds what is the

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