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19 Pages

### Chapter 16 Solutions V1

Course: FIN FIN/554, Summer 2006
School: Phoenix
Rating:

Word Count: 5749

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16: Chapter Capital Structure: Limits to the Use of Debt 16.1 a. The value of a firms equity is the discounted expected cash flow to the firms stockholders. If there is a boom, Good Time will generate cash flow of \$250 million. Since Good Time owes its bondholders \$150 million, the firms stockholders will receive \$100 million (= \$250 million - \$150 million) if there is a boom. If there is a recession, Good Time...

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Phoenix - FIN - FIN/554
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