The Maxwell Company is financed entirely with equity. The company is considering a loan of $640,000....

The Maxwell Company is financed entirely with equity. The company is considering a loan of $640,000. The loan will be repaid in equal principal installments over the next two years, and it has an interest rate of 7 percent. The company's tax rate is 35 percent. According to MM Proposition I with taxes, what would be the increase in the value of the company after the loan?

Expert Solution

Answer:--> The increase in the value of the company after the loan is $ 21501.97.

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