A company is totally financed by equity capital for a market value of 200m. The only tax
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A company is totally financed by equity capital for a market value of 200m. The only tax it has to pay is corporate income tax at a rate of 40%. Calculate the value of this company if it borrows 50m at 6% to perpetuity, to be used to repay a part of shareholders’
equity. Shareholders would then require an 11% return.
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Related Book For 
Corporate Finance Theory And Practice
ISBN: 9780470721926
2nd Edition
Authors: Pierre Vernimmen, Pascal Quiry
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