Should you do this and why what would be the change in the, Financial Management

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Should you do this and why what would be the change in the

You own all the equity of ABC Co. The company currently has no debt. The company's annual cash flow is $700,000 before interest and taxes. The corporate tax rate is 35%. You have the option to exchange 1 /3 of your equity position for 4% coupon bonds with a face value of $1,500,000. Should you do this, and why? What would be the change in the market value of the firm after the exchange?

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Financial Management: Should you do this and why what would be the change in the

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