Consider the Modigliani and Miller World of Corporate Taxes

Multiple Choice

Consider the Modigliani and Miller world of corporate taxes.An unlevered (all-equity) firm value is $300 million.By adding debt,the annual interest expense is $30 million,the corporate tax rate is 30%,and the discount rate on the tax shield is 7%.What is the value of the firm after adding debt?

A) $366.67 million
B) $428.57 million
C) $433.33 million
D) $467.53 million