The Federal corporate tax rate currently is 21%. If a company with anenterprise value of $3billion has $1billion of debt paying 6%, and plans to have this debt forever, and if the tax rate is increased to 26%, according to Miller & Modigliani, how does this change impact the enterprise value of this company? Provide a % change.
The Federal corporate tax rate currently is 21%. If a company with anenterprise value of $3billion has $1billion of debt paying 6%, and plans to have this debt forever, and if the tax rate is increased to 26%, according to Miller & Modigliani, how does this change impact the enterprise value of this company? Provide a % change.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The Federal corporate tax rate currently is 21%. If a company with anenterprise value of $3billion has $1billion of debt paying 6%, and plans to have this debt forever, and if the tax rate is increased to 26%, according to Miller & Modigliani, how does this change impact the enterprise value of this company? Provide a % change.
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