Summit Builders has a market debt-equity ratio of 0.65 and a corporate tax rate of 40%, and

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Summit Builders has a market debt-equity ratio of 0.65 and a corporate tax rate of 40%, and it pays 7% interest on its debt. By what amount does the interest tax shield from its debt lower Summit’s WACC?

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Fundamentals of Corporate Finance

ISBN: 978-0132148238

2nd edition

Authors: Berk, DeMarzo, Harford

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Question Posted: Jan 14, 2012 01:55 AM

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Summit Builders has a market debt-equity ratio of 0.65 and a corporate tax rate of 40%, and

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Plan We can use Eq 162 to compute the fraction of the firms value financed ...View the full answer

Fundamentals of Corporate Finance

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