Calculate the value of leverage for cruise company and


Calculate the value of leverage for Cruise Company and Kidman Company, whose economic balance sheets are shown. Assume the marginal corporate tax rate is 35%, the marginal tax rate on personal income derived from equity is 20%, and the marginal tax rate on personal interest deductions is 39.6%. Assume no costs to financial distress and no operating effects to leverage.

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Financial Management: Calculate the value of leverage for cruise company and
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