Big Corp.anticipates issuing $5,000,000 of debt to repurchase equity.If Big can issue the debt to yield 8% per year,then what is the increase in value to Big if it issues the debt and is subject to a 34% marginal tax rate?
A) $136,000
B) $400,000
C) $1,700,000
D) none of the above
Correct Answer:
Verified
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