What is the new debt-to-value ratio

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Company A has assets worth $100,000,000. The company has a 0.2 debt-to-value ratio and keeps a constant-debt policy. Company A decides unexpectedly to reduce its debt by a half replacing it with equity, keeping the debt constant thereafter. The interest rate on debt is 7.50% and the tax rate is 36%. What is the new debt-to-value ratio? Show your working

Reference no: EM13929951

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