That is to say a firm with a debt, supposedly perpetual, of 100 million euros. The interest

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That is to say a firm with a debt, supposedly perpetual, of 100 million euros. The interest on this debt is 6%.

Your discount rate is 5%. The tax rate is 33.3% (one third). One million euros of additional debt would lead to an increase in bankruptcy costs of 200,000 euros. Should we take on more debt?

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: Mar 15, 2023 04:05 AM

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That is to say a firm with a debt, supposedly perpetual, of 100 million euros. The interest

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Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

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