Question
M&M theory A firm that generates EBIT of $5M every year has $50M of debt outstanding that pays annual interest at a rate of 6%.
M&M theory
A firm that generates EBIT of $5M every year has $50M of debt outstanding that pays annual interest at a rate of 6%. The required return on the assets of an otherwise identical unlevered company is 12%. What should be the value of the firm if it is subject to a corporate income tax rate of 40% and the present value of its expected bankruptcy costs were $10M?
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Essentials Of Real Estate Finance
Authors: Doris Barrell
15th Edition
1475462077, 978-1475462074
