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Assume we are examining 2 firms, X and Y , that are identical except that X has zero debt and Y has $ 6 0
Assume we are examining firms, X and Y that are identical except that X has zero debt and Y has $ of loans outstanding in the form of bonds on which Y is paying an interest rate year The corporate income tax rate and both firms pay out their entire Net Income as dividends to their shareholders. CostsExpenses Excluding Interest of Revenues. Fill in all the missing data in the table below. Assume you own all the stock of both firms and you also own all the bonds of Y What is the total cash you receive from X From Y What is the dollar amount of Firm Ys interest tax shield? Make sure your name is printed legibly on the top of this page.
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