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An outstandingly successful company is all-equity financed with a value of $239 million. The personal income tax rate on interest is 50%, and the personal
An outstandingly successful company is all-equity financed with a value of $239 million. The personal income tax rate on interest is 50%, and the personal income tax rate on equity is 11%. The corporate tax rate is 35%. What would be the total value of the company if the leverage was increased to include $107 million of perpetual debt financing? Currently, the potential value lost due to shirking and perquisites is $18 million; these would drop to $7 million under the new structure. Expected costs of financial distress would rise from $0 to $10 million. ndicate your answer in millions and round to two decimal places. Do not put '$ in our response. ir
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