In: Finance
Refer to Problem 1. Suppose investors are subject to 20% personal tax rate on dividend income and personal 40% tax rate on interest income. Based on this information and the information in Problem 1: a. What will be the market value of the firm’s equity after the change in its capital structure? b. What will be the share price after the change in firm’s capital structure? c. What will be the firm’s WACC after the change in its capital structure?
Problem 1 can be seen:
https://www.chegg.com/homework-help/questions-and-answers/problem-1-10-points-2-points-part-firm-debt-financed-financial-leverage-600-000-common-sha-q52038427?trackid=0WBVElc3