The Federal corporate tax rate currently is 21%. If a company with anenterprise value of $3billion has $1billion of debt paying 6%, and plans to have this debt forever, and if the tax rate is increased to 26%, according to Miller & Modigliani, how does this change impact the enterprise value of this company? Provide a % change.
The Federal corporate tax rate currently is 21%. If a company with anenterprise value of $3billion has $1billion of debt paying 6%, and plans to have this debt forever, and if the tax rate is increased to 26%, according to Miller & Modigliani, how does this change impact the enterprise value of this company? Provide a % change.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter6: Accounting For Financial Management
Section: Chapter Questions
Problem 7P
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The Federal corporate tax rate currently is 21%. If a company with anenterprise value of $3billion has $1billion of debt paying 6%, and plans to have this debt forever, and if the tax rate is increased to 26%, according to Miller & Modigliani, how does this change impact the enterprise value of this company? Provide a % change.
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