Question
A company issues a ten-year risk-free bond of $100M to pay a one-time dividend. The company is committed never to borrow again in the future.
A company issues a ten-year risk-free bond of $100M to pay a one-time dividend. The company is committed never to borrow again in the future. Assume the risk free rate is 3% and the corporate tax rate is 20%. The company is expected to be profitable in the next ten years. What is the present value of the debt tax shield?
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The present value of the debt tax shield can be calculated using the following steps 1 Calculate the ...
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
