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Please show work and do not round intermediate calculations thank you Here are book and market value balance sheets ot the United Frypan Company (UF):
Please show work and do not round intermediate calculations
thank you
Here are book and market value balance sheets ot the United Frypan Company (UF): Book Value Balance Sheet Net working capital Long-term assets $220 280 ssoo $240 260 Market Value Balance Sheet Net working capital Long-term assets $220 340 $660 $240 320 Debt Equity Debt Equity Assume that MM's theory holds witn taxes. There is no growth, and the $240 ot debt is expected to be permanent. Assume a 30% corporate tax rate. a. How much of the firm's value is accounted tor by the debt-generated tax shield? PV tax shield b. How much better off will UFs shareholders be it the firm borrows $220 more and uses it to repurchase stock? Increase in equity value
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