FIN 571 WEEK 5 Effect of Debt Issuance on Stock Valuation Purpose of Assignment The purpose of this assignment is to demonstrate to students how the issuance of debt to purchase outstanding common stock could affect the value of the companys equity and redefine the capital structure. The problem will also allow students to explore the effect of corporate taxes through debt financing. Assignment Steps Resources:Corporate Finance Scenario:Hightower, Inc. plans to announce it will issue 2.0 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 5%. Hightower, Inc. is currently an all-equity company worth 7.5 million with 400,000 shares of common stock outstanding. After the sale of the bonds, the company...