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Suman Rani

· started a discussion

· 1 Months ago

full solution (Question: 187375.0 )

sir/madam,
plz provide solution for this question

Question:
What is the value of the tax shield if the value of the firm is $5 million, its value if unlevered would be $4.78 million, and the present value of bankruptcy and agency costs is $360,000?
Options:
A) $140,000 
B) $220,000
C) $360,000 
D) $580,000 
E)

None of these

Solution:

Ans (d)

Knowledge Expert

· commented

· 1 Months ago

The value of a tax shield is calculated as the amount of the taxable expense, multiplied by the tax rate.
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