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Templeton Pharma anticipates a pre-tax earnings stream of $200,000 inperpetuity and faces a 40 percent corporate tax rate. The appropriate discountrate is 10 per- cent. Templeton Pharma currently has an all-equity capitalstructure but is consider. ing borrowing $100,000. Assume there are no a. What is the value of the all equity firm? b. The personal tax rate on equity distributions is 25 percent, and the personal tax tax c. The personal tax rate on equity distributions is 25 percent, and the personal t rate on interest is 25 percent. What is the value of the levered firm? rate on interest is 40 percent. What is the value of the levered firm? tax d. The personal tax rate on equity distributions is 25 percent, and the personal r rate on interest is 55 percent. What is the value of the levered firm? e. The personal tax rate on equity distributions is 25 percent, and the personal tax rate on interest is 70 percent. What is the value of the levered firm? f. What can you conclude from your answers to the above questions? bankruptcycosts. this

Templeton Pharma anticipates a pre-tax earnings stream of $200,000 inperpetuity and faces a 40 percent corporate tax rate. The appropriate discountrate is 10Per. cent. Templeton Pharma currently has an all-equity capitalstructure but is consider. ing borrowing $100,000. Assume there are no bankruptcycosts. a. What is the value of the all equity firm? b. The personal tax rate on equity distributions is 25 percent, and the personal tax rate on interest is 25 percent. What is the value of the levered firm? c. The personal tax rate on equity distributions is 25 percent, and the personal tax rate on interest is 40 percent. What is the value of the levered firm? d. The personal tax rate on equity distributions is 25 percent, and the personal tax rate on interest is 55 percent. What is the value of the levered firm? e. The personal tax rate on equity distributions is 25 percent, and the personal tax rate on interest is 70 percent. What is the value of the levered firm? f. What can you conclude from your answers to the above questions