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The Full Value of the LEVERED firm can be best expressed by... Value of the UNLEVERED Firm + [rd(1 - T)] + Financial Distress Value
The Full Value of the LEVERED firm can be best expressed by... Value of the UNLEVERED Firm + [rd(1 - T)] + Financial Distress Value of the UNLEVERED Firm + rd(Debt outstanding)(Tax rate) + PV of the Cost of Financial Distress (bankruptcy) rd Value of the UNLEVERED FIRM + PV of Tax Shield on Debt PV of the LEVERED FIRM + Tax Shield on Debt
The Full Value of the LEVERED firm can be best expressed by...
Value of the UNLEVERED Firm + [rd(1 - T)] + Financial Distress
Value of the UNLEVERED Firm + rd(Debt outstanding)(Tax rate) + PV of the Cost of Financial Distress (bankruptcy)
rd
Value of the UNLEVERED FIRM + PV of Tax Shield on Debt
PV of the LEVERED FIRM + Tax Shield on Debt
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
