Consider the Following Formula: VL = VU + the Term

question 78

Multiple Choice

Consider the following formula: VL = VU + The term represents:

• A)the value of the firm with leverage.
• B)the present value of the interest tax shield.
• C)the present value of the future interest payments.
• D)the interest tax shield each year.

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Definitions:

Privity of Contract

The relationship between parties in a contract that confers rights and obligations. It typically prevents a third party from enforcing or being subject to the terms of the contract.

Equitable Assignment

The transfer of future rights to benefits in property or contracts, recognized by equity rather than common law.

Non Est Factum

A legal defense claiming a contract is invalid because it was misunderstood or misrepresented at the time of signing, not reflective of the signer's intent.

Unconscionability

A condition in contract law where an agreement is deemed unjust or extremely one-sided in favor of the party with superior bargaining power.