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7) Based on the diagram below, breifly explain what this diagram is all about. Make sure to explain all the concepts labelled in this diagram

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7) Based on the diagram below, breifly explain what this diagram is all about. Make sure to explain all the concepts labelled in this diagram Value of the firm (V) Voo Present value of tax shield on debt Financial distress costs Maximum firm value VAT Actual value Va-Value of C with not Total de (D) D Optimal amount of debt

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