2. a. (1) Value if unlevered (in thousands): Chapter 9 Theory of Capital S t r u...
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2.
a. (1) Value if unlevered (in thousands):
Chapter 9 Theory of Capital S t r u c t u r e 285 EBIT $ 3,000 Profit before taxes 3,000 Taxes 1,200 Profit after taxes .$Tm =
1; required equity return .18 Value if unlevered $-10,000 ($10 million) ,
(2) Value with $4 million in debt:
Value = Value if unlevered + Value of tax shield Value = $10,000 + .40($4,000) = $11,600
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