What is the value of the tax shield if the value of the firm is Rs.5 million, its value if unlevered would be Rs.4.78 million, and the present value of bankruptcy and agency costs is Rs.360,000?
Rs.140,000
Rs.220,000
Rs.360,000
Rs.580,000
Answers
Answered by
4
Answer:
Not sure but 360000 recheak it from someone else
Answered by
3
Option "D" is the correct answer to the following statement.
Explanation:
Given:
Value of firm = 5,000,000
Unrevealed value = 4,780,000
Present value of bankruptcy = 360,000
Value of the tax shield = ?
Computation of value of the tax shield :
Value of the tax shield = Value of firm - Unrevealed value + Present value of bankruptcy
Value of the tax shield = 5,000,000 - 4,780,000 + 360,000
Value of the tax shield = 580,000
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