Fidget Inc

question 45

Multiple Choice

Fidget Inc.is currently worth $10,000,000.It is told that if it issues $1,000,000 of perpetual debt (and uses the proceeds to repurchase equity) the value of the firm will increase by $290,000.If the total bankruptcy costs and agency costs combine to be a cost of $20,000,what is Fidget's marginal corporate tax rate? Ignore personal taxes.

• A) 29%
• B) 30%
• C) 31%
• D) none of the above

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Definitions:

Depression

A common and serious mood disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.

Therapeutic Alliance

The collaborative and trusting relationship between a therapist and client, which is crucial for effective therapy.

Unconditional Positive Regard

Accepting and respecting others as they are without judgment or evaluation.

Mutual Understanding

A shared agreement or knowledge between individuals or groups, often leading to effective communication or cooperation.