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Given the following information, leverage will add how much value to the unlevered firm per pound of debt?
Corporate tax rate: 34%
Personal tax rate on income from bonds: 30%
Personal tax rate on income from equities: 30%
Posterior Probability
The probability of an event or hypothesis being true after taking into consideration new evidence or information.
Prior Probability
The probability of an event or hypothesis before new evidence is taken into account.
Bayes' Law
A theorem in probability theory used to update the probability of a hypothesis as more evidence or information becomes available.
Posterior Probability
The probability of an event or hypothesis after taking into consideration new evidence or information.
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