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The term ___________ refers to the fact that these cash flows reflect the amount by which the firm's total after-tax free cash flows will change if...
The term ___________ refers to the fact that these cash flows reflect the amount by which the firm's total after-tax free cash flows will change if the project is adopted.
a. Periodic
b. Exceptional
c. Incremental
d. Deflationary
2. Droz's Hiking Gear Company has found that its common equity shares have a beta equal to 1.50 while the risk-free return is 12 percent and the market risk premium is 6 percent. It has 10-year bonds outstanding with a market price of $1,000, a face value of $1,000, and an annual coupon rate of 15 percent. The total market value (debt plus equity) of the firm is $20,000,000. What is the market value of the firm's debt if the firm's WACC is 18 percent and the firm is subject to a 40 percent marginal tax rate?
