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Given the Following Information for a Levered and Unlevered Firm

Question 46

Multiple Choice

Given the following information for a levered and unlevered firm, calculate the difference in the cash flow available to investors. Assume the corporate tax rate is 40%. (Hint: Calculate the tax savings arising form the tax deductibility of interest payments) . Given the following information for a levered and unlevered firm, calculate the difference in the cash flow available to investors. Assume the corporate tax rate is 40%. (Hint: Calculate the tax savings arising form the tax deductibility of interest payments) . A) $8 B) $18 C) $78 D) $90


A) $8
B) $18
C) $78
D) $90

Correct Answer:

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