INTERMEDIATE FINANCIAL MANAGEMENT
12th Edition
ISBN: 9781305718265
Author: Brigham
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Chapter 17, Problem 4MC
Suppose investors are subject to the following tax rates: Td = 30% and Ts = 12%.
- (1) According to the Miller model, what is the gain from leverage?
- (2) How does this gain compare with the gain in the MM model with corporate taxes?
- (3) What does the Miller model imply about the effect of corporate debt on the value of the firm; that is, how do personal taxes affect the situation?
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INTERMEDIATE FINANCIAL MANAGEMENT
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