PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
Question
Chapter 18, Problem 1PS
Summary Introduction

To discuss: The assumption under which the present value (PV) calculation is correct.

Expert Solution & Answer
Check Mark

Explanation of Solution

The PV calculation assumes that the debt is fixed and perpetual, rate of tax is fixed, the personal tax rates on interest of investors and equity income are same. These assumptions proves that the calculation of PV is correct.

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