Your firm has debt worth $200,000, with a yield of 9 percent, and equity worth $300,000. It is growing at a 4 percent rate, and faces a 40 percent tax rate. A similar firm with no debt has a cost of equity of 12 percent. Under the MM extension with growth, what is the value of your firm's tax shield?© BrainMass Inc. brainmass.com June 22, 2018, 8:48 pm ad1c9bdddf
Debt amount = $200000
Yield = 9%
Interest Payment = 9%*200000=18000
Tax rebate on interest ...