Question
The M Company has an EBIT of $225,000 that is constant over time and a corporate tax rate of 38%. Company M uses $5,000,000 of
The M Company has an EBIT of $225,000 that is constant over time and a corporate tax rate of 38%. Company M uses $5,000,000 of debt financing. If M used no debt, its cost of equity would be 11%. According to the Modigliani Miller theory with corporate taxes, the value of M should be:
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Handbook Of Financial Risk Management
Authors: Thierry Roncalli
1st Edition
1138501875, 978-1138501874
