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ramesh kumar

· started a discussion

· 1 Months ago

sir i didinot understand how to solve this types of question please slove the solution and send immediately

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

Dear student
According to question
we can find.
$5M - $4.78M + $0.36M = $0.58M
$580,000

Best wishes
Team TR

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