Costs to financial distress-no operating effects to leverage

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Reference no: EM13922977

Calculate the value of leverage for Cruise Company and Kidman Company, whose economic balance sheets are shown. Assume the marginal corporate tax rate is 35%, the marginal tax rate on personal income derived from equity is 20%, and the marginal tax rate on personal interest deductions is 39.6%. Assume no costs to financial distress and no operating effects to leverage.

Reference no: EM13922977

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