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Assume that MM's theory holds except for taxes. There is no growth, and the $80 of debt is expected to be
OP LU email}}) LU lib YTD SwapsySavedHelpSave & ExitHere are book - and market-value balance sheets of the United FrypanCompany:"\Book - Value Balance SheetNet working capitalBB$Debt80Long- term assets70Equity20180$108\Market - Value Balance Sheet88Net working capital$BBDebt*Long - term assets170\Equity1202 0 0\2 80$Assume that MM's theory holds except for taxes. There is no growth , andthe $80 of debt is expected to be permanent . Assume a 32% corporate tayrate .a . How much of the firm's market value is accounted for by the debt -generated tax shield ?"PV tax shield< Prey4 Of 4Next
