How do corporate income taxes modify MM's leverage irrelevance proposition?
D. Future interest tax shields are usually valued by discounting at the borrowing rate r_debt. In the special case of permanent debt,
PV tax shield = T_c (r_debt * D)/r_debt = T_cD
Of course interest tax shields are valuable only for companies that are making profits and paying taxes.

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The Answer of How do corporate income taxes modify MM's leverage irrelevance proposition? D. Future interest tax shields are usually valued by discounting at the borrowing rate r_debt. In the special case of permanent debt, PV tax shield = T_c (r_debt * D)/r_debt = T_cD Of course interest tax shields are valuable only for companies that are making profits and paying taxes.

How Do Corporate Income Taxes Modify MM's Leverage Irrelevance Proposition