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Use the One - Shot Model to calculate the Firm's Bankruptcy Cost: Probability of Bankruptcy: 2 7 % Fraction of the firm lost in the

Use the One

-

Shot Model to calculate the Firm's Bankruptcy Cost:

Probability of Bankruptcy:

27 %

Fraction of the firm lost in the bankruptcy:

30 %

Value of the unlevered firm:

100, 000

Value of the tax shield:

3, 000

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