PPT Slide
Tc = 40%, Td = 30%, and Ts = 25%.
VL = VU + [1 - ]D
= VU + (1 - 0.6429)D
VL = VU + 0.3571D.
Value rises with debt; $100 increase in debt raises firm’s value by $35.71.
(1 - 0.40)(1 - 0.25)
(1 - 0.30)
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