Multiple Choice
Consider the Modigliani and Miller world of corporate taxes.An unleveraged (all-equity) firm value is $100 million.By adding debt,the annual interest expense is $10 million,the corporate tax rate is 40%,and the discount rate on the tax shield is 10%.What is the value of the firm after adding debt?
A) $100 million
B) $120 million
C) $140 million
D) $160 million
Correct Answer:
Verified
Correct Answer:
Verified
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