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Which one of the following represents the difference between the value of a levered and an unlevered firm in a world with corporate taxes? Select
Which one of the following represents the difference between the value of a levered and an unlevered firm in a world with corporate taxes?
Select one:
a. Zero
b. The present value of the firm's EBIT multiplied by one minus the firm's tax rate
c. The present value of the interest tax savings (interest tax shield)
d. The firm's debt-equity ratio multiplied by one minus the firm's tax rate
e. The sum of all interest payments in perpetuity
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