Question: The Maxwell Company is financed entirely with equity The company
The Maxwell Company is financed entirely with equity. The company is considering a loan of $1.8 million. The loan will be repaid in equal installments over the next two years, and it has an interest rate of 8 percent. The company’s tax rate is 35 percent. According to MM Proposition I with taxes, what would be the increase in the value of the company after the loan?
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