Ip (1 - Tp) = F (1 – TE) In this case, TE = 1-[rD (1- Tp)/ FE

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter11: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 11.18E
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Can you show how this was done

r_D = cost of debt

r_E = Cost of equity 

T_E = Taxes on equity

 

Ip (1 – Tp) = Fg (1 – TẸ)
In this case, TE = 1-[ro (1 - TD)]/ FE
Transcribed Image Text:Ip (1 – Tp) = Fg (1 – TẸ) In this case, TE = 1-[ro (1 - TD)]/ FE
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