What Is the Change in Value for a Firm with $1

question 68

Multiple Choice

What is the change in value for a firm with $1 million in equity, $1 million in permanent debt at a 10% interest rate, and a 35% tax rate if MM I is modified to recognize corporate taxes?

• A)value increases by $35,000
• B)value increases by $100,000
• C)value increases by $350,000
• D)value increases by $700,000

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Definitions:

Task Labor

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