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Marion Manufacturing, a steel company, announces that it will betaking a ma-jor restructuring charge that will lower earnings this year by$500 million. As-sume that the charge is not tax deductible and has no effects onoperations.a. What will the effect of this charge be on the value of thefirm?b. When the firm announces the charge, what effect would youexpect it tohave on the stock price? Is your answer consistent with yourresponse toquestion (a)?
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