Hi, I got your response to the question was asked, however Could you indicate how you arrived at the twofigures which is highlighted in yellow please

70. Wigdor Manufacturing is currently all equity financed, has an EBIT of $2 million, and is in the 34% tax bracket. Louis, the company's founder, is the lone shareholder. Assume that all earnings are paid out as dividends. Now consider the fact that Louis must pay personal tax on the firm's cash flow. Louis pays taxes on interest at a rate of 33%, but pays taxes on dividends at a rate of 28%. Calculate the total cash flow to Louis after he pays personal taxes. Questions I am unsure about : Could you provide how the various figures in this solution was arrived at for both the unlevered and levered firm? Unleveraged 2000000X(100-34%) = 1,320,000 Tax on Dividends 1,320,000 X 28% = 369,600 Cash Flow 1,320-369,6 =950,400 Leveraged 2,000,000 - 950,400 = 1,056,000 ( Where did you get the figure of $950,400) Tax 1056000X28% =295680 Cash flow = 1056000-295680 = 760,320 Taxes 20% of 2M = 400,000 ( Why did you use a tax rate of 20%) 400,000 X 33% = 132000 Cash flow from interest 400,000-132000=268000 Cash flow from dividends 760320 Total cash flow 760320+268000=1028320