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How does a change in capital gains tax rates affect the firms value? Explain using the idea of levered versus unlevered firms. Explain how a

  1. How does a change in capital gains tax rates affect the firms value? Explain using the idea of levered versus unlevered firms.
  2. Explain how a business may decrease the firms value by using more debt to finance growth.
  3. Explain why the enterprise value of the firm adds debt versus subtracting it.
  4. Explain the difference between a firms beta (b) and the firms alpha (a).

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