According to MM, what is the new market value of the equity of the firm?


An all-equity strong is theme to a 30-percent municipal tax admonish. Its equityholders insist-upon a 20-percent give-back. The strong"s judicious dispense estimate is $3,500,000, and there are 175,000 shares ungathered. The strong issues $1 favorite of bonds at 10 percent and uses the pay to recompense contemptible hoard. Assume there is no shift in the require of financial disturb for the strong. According to MM, what is the new dispense estimate of the equity of the strong?