Principles of Corporate Finance
Principles of Corporate Finance
13th Edition
ISBN: 9781260465099
Author: BREALEY, Richard
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 28, Problem 25PS
Summary Introduction

To discuss: The reason why reducing tax shield and an alternative to be use as a measure of cost of capital and reducing the cost of equity from net income will give the same outcome.

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Where can I find after tax interest income on a balance sheet or income statement(trying to find Economic Value added after-tax interest+net income-(cost of capital))? I have work that only shows interest expense before finding EBT. Do we use interest expense?
What is the compressed adjusted present value(APV) model, and how does this differ from theModigliani and Miller models? (Hint: think of thediscount rate on the tax shield. What is “compressed” about this model?)
The after tax cash flow requires more computation than the before tax cash flow evaluation? True False
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