Consider the Following Formula: VL = VU + τCD

question 81

Multiple Choice

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

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

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Definitions:

Troy Oz

A unit of measure for precious metals, equivalent to approximately 31.1035 grams, used in the commodities market.

July Silver Contract

A futures contract for the delivery of a specified amount of silver in the month of July.

Marking-To-Market

The accounting practice of updating the value of an asset to its current market level rather than its book value, typically used for financial instruments.