This is a company's market value balance sheet. Net Working Capital 20 Debt (D) 40 Long-term assets
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Question:
This is a company's market value balance sheet.
Net Working Capital | 20 | Debt (D) | 40 |
Long-term assets | 140 | Equity (E) | 120 |
Firm Value | 160 | Firm Value (V) | 160 |
Assume no growth, and the $40 of debt is permanent. Corporate tax rate is 40%. How much of the firm's value is accounted for by the interest tax shield?
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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