In an M&A evaluation using APV method, the target company currently (year 0) has $5 million of

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In an M&A evaluation using APV method, the target company currently (year 0) has $5 million of debt outstanding. The debt balance then is expected to increase by 5% at the end of each year for the foreseeable future. The cost of debt as well as coupon rate is expected to remain constant at 12%. Assume the company is in the 34% tax bracket.

Calculate the present value of the overall tax shield benefit of debt (i.e., PV(TS))

Related Book For answer-question

Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

ISBN: 978-1337614689

9th edition

Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

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Posted Date: Sep 13, 2023 01:53 AM

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In an M&A evaluation using APV method, the target company currently (year 0) has $5 million of

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Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

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