Day-Cin Vacs, Inc. is a small business, but incorporated for tax and liability purposes. The firm has no debt, and is valued at $304,012. But the sole owner and operator was recently told that borrowing could increase the firm's value. The owner has asked for your opinion. What will the firm's value be if it takes out a loan of $70,219 at an interest rate of 9.39%? The firm pays an effective tax rate of 23%.

Answer rating: 100% (QA)

To determine the firms new value if it takes out a loan we need to consider both the loan amount and ... View the full answer