Question
The present value of all its future pre-tax earnings is $10,000 (i.e. the pre-tax value of Tribes assets is $10,000). The company is all equity
The present value of all its future pre-tax earnings is $10,000 (i.e. the pre-tax value of Tribes assets is $10,000). The company is all equity financed and has a corporate tax rate of 40%. Assuming no personal taxes, how much money does the government get in taxes (in present value terms), and what is the after-tax value VU of the firm?
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Public Finance And Public Policy
Authors: Jonathan Gruber
2nd Edition
0716766310, 9780716766315
