How Do Corporate Income Taxes Modify MM's Leverage Irrelevance Proposition

question 89

Essay

How do corporate income taxes modify MM's leverage irrelevance proposition?
D.Future interest tax shields are usually valued by discounting at the borrowing rate r_debt.In the special case of permanent debt,
PV tax shield = T_c (r_debt x D)/r_debt = T_cD

---

Definitions:

Polarization

The process through which opinions, attitudes, or behaviors become more extreme, leading to division or conflict within a group or society.

Restricted Code

A speech pattern used within a particular social group, characterized by shared references, jargon, and shorthand that may be incomprehensible to outsiders.

Static Evaluation

A tendency to view people or situations as unchanging and to overlook potential for development or change.

Extended I Language

A brief preface to a feedback statement, intended to communicate that you do not want your listener to take your message in an overly critical way.