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Given the Total Value of a Levered Firm Is Represented

Question 40

Multiple Choice

Given the total value of a levered firm is represented by Vu + tcD,and is equal to $1 million,find D.Assume the total value of an equivalent unlevered firm is $0.8 million and the company tax rate is 30 per cent.


A) $0.24 million
B) $0.30 million
C) $0.20 million
D) $0.67 million

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