Question
Suppose that your firm's current unlevered value is $800,000 and its marginal corporate tax rate is 35%. Also, you model the firm's PV of financial
Suppose that your firm's current unlevered value is $800,000 and its marginal corporate tax rate is 35%. Also, you model the firm's PV of financial distress as a function of its debt ratio (D/V) according to the relation: PV of financial distress = 800,000 x (D/v)2 (squared). What is the firm's levered value if it issues $200,000 of perpetual debt to buy back stock?
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The Engineers Cost Handbook Tools For Managing Project Costs
Authors: Richard E. Westney
1st Edition
0824797965, 978-0824797966
