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A local firm has debt worth $200,000, with a yield of 11%, and equity worth $300,000. It is growing at a 6% rate, and its
A local firm has debt worth $200,000, with a yield of 11%, and equity worth $300,000. It is growing at a 6% rate, and its tax rate is 40%. A similar firm with no debt has a cost of equity of 15%. Under the MM extension with growth, what is the value of your firm's tax shield, i.e., how much value does the use of debt add?
$97,778 | ||
$102,857 | ||
$113,143 | ||
$124,457 | ||
$136,903
Show the calculations |
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