Given the Total Value of a Levered Firm Is Represented

question 40

Multiple Choice

Given the total value of a levered firm is represented by V_u + t_cD,and is equal to $1 million,find D.Assume the total value of an equivalent unlevered firm is $0.8 million and the company tax rate is 30 per cent.

• A)$0.24 million
• B)$0.30 million
• C)$0.20 million
• D)$0.67 million

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