Assume that LoPine Ltd, a US-based company (which has a classical taxation system), borrows $10 million at
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Assume that LoPine Ltd, a US-based company (which has a classical taxation system), borrows $10 million at an interest rate of 15% and uses the funds to repurchase shares worth $10 million. Further, assume that the company tax rate is 35%, the marginal income tax rate is 30% and the average tax rate on equity income is 12%. Calculate the net tax savings per year.
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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