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So I understand your example. But my understanding is that M&M proposition II says that in a world with taxes, increasing debt means increasing the value of the firm or Enterprise Value. In the examples you provided me, the enterprise value of the firm stayed constant. I'm saying, if we change the debt/equity levels through share repurchase...enterprise value should go up. So how is that not a positive NPV project? The only way I can reconcile this is to think that the potential value creation from leverage is priced into the stock, so it's zero NPV. However, I don't know if that's the right idea. Read More