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When [(1-tc) x (1-ts) =(1-tg)], then the: firm should hold no debt. value of the levered firm is greater than the value of the
When [(1-tc) x (1-ts) =(1-tg)], then the: firm should hold no debt. value of the levered firm is greater than the value of the unlevered firm. cash flow to stockholders equals the cash flow to bondholders. tax shield on debt is exactly offset by higher levels of dividends.
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
13th International Edition
1265533199, 978-1265533199
