How much value to the unlevered firm per dollar of debt


Problem: Given the following information, leverage will add how much value to the unlevered firm per dollar of debt?

Corporate tax rate: 34%
Personal tax rate on income from bonds: 50%
Personal tax rate on income from stocks: 10%

a. $-0.050
b. $-0.188
c. $0.188
d.  $0.633
e. None of the above.

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Finance Basics: How much value to the unlevered firm per dollar of debt
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