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Given the following information, leverage will add how much value to an unlevered firm per dollar of debt ? (Approximately) Corporate tax rate: 34% Personal
Given the following information, leverage will add how much value to an unlevered firmper dollar of debt? (Approximately)
Corporate tax rate: 34%
Personal tax rate on income from bonds: 30%
Personal tax rate on income from stocks: 20%
[Note: This question requires some thought. Consider how money passes from the firm to investors. Do not simply apply the relative advantage formula here, as it yields a percentage, not an actual dollar amount.]
Could you give a detailed explanation?
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