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unlevered firm per dollar of debt

Given the following information, leverage will add how much value to the unlevered firm per dollar of debt?

Corporate tax rate: 34%
Personal tax rate on income from bonds: 50%
Personal tax rate on income from stocks: 10%

a. $-0.050
b. $-0.188
c. $0.188
d. $0.633
e. None of the above.

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e. None of the above. Leverage will add 34% value to the unlevered firm per dollar of debt. Please note that the corporate tax is the only rate relevant ...

Solution Summary

Unlevered firm per dollar of debt is calculated.

$2.19