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the unlevered firm has a value of $500 million. an otherwise identical but levered firm has $70 million in debt at a 9% interest rate.
the unlevered firm has a value of $500 million. an otherwise identical but levered firm has $70 million in debt at a 9% interest rate. Its cost of debt is 7% and its cost of equity is 11%. No growth is expected. Assuming the corporation tax rate is 35%, Use the MM zero tax model with corporation taxes to determine the value of the levered firm
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