Timlin Motors' value with no debt is $380 million. However, the firm uses $80 million in debt financing, and its corporate tax rate is 40 percent. Timlin's CFO is trying to value the firm now. The appropriate personal tax rates on debt and stock income are 35 and 15 percent, respectively. By how much does the firm's value change, if the CFO values Timlin using Modigliani and Miller's corporate and personal taxes model instead of the no taxes model?

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The Answer of Timlin Motors' value with no debt is $380 million. However, the firm uses $80 million in debt financing, and its corporate tax rate is 40 percent. Timlin's CFO is trying to value the firm now. The appropriate personal tax rates on debt and stock income are 35 and 15 percent, respectively. By how much does the firm's value change, if the CFO values Timlin using Modigliani and Miller's corporate and personal taxes model instead of the no taxes model?

Timlin Motors' Value with No Debt Is $380 Million