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The current value of a firm is $952,511 and it is 100% equity financed. The firm is considering restructuring so that it is 31% debt
- The current value of a firm is $952,511 and it is 100% equity financed. The firm is considering restructuring so that it is 31% debt financed. If the firm's corporate tax rate is 40%, what will be the new value of the firm under the MM theory with corporate taxes but no possibility of bankruptcy. Round to answer to two decimals.
- The current value of a firm is $474,519 and it is 100% equity financed. The firm is considering restructuring so that it is 22% debt financed. If the firm's corporate tax rate is 25%, the typical personal tax rate of an investor in the firm's stock is 15%, and the typical tax rate for an investor in the firm's debt is 25%, what will be the new value of the firm under the MM theory with corporate taxes but no possibility of bankruptcy. Round the answer to two decimals.
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A Fast And Frugal Finance
Authors: William P. Forbes, Aloysius Igboekwu, Shabnam Mousavi
1st Edition
0128124954, 978-0128124956
