Century 21 Accounting Multicolumn Journal
11th Edition
ISBN: 9781337679503
Author: Gilbertson
Publisher: Cengage
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TechnoWorks has an expected EBIT of $50,000 in perpetuity and a tax rate of 30 percent. The firm has $100,000 in outstanding debt at an interest rate of 8 percent, and its unlevered cost of capital is 12 percent. What is the value of the firm according to M&M Proposition I with taxes? Should TechnoWorks change its debt-equity ratio if the goal is to maximize the value of the firm?
General accounting
Subject. General Account
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