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What is the present value of the debt tax shield

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Reference no: EM132795520

Problem 1: Describe the two Modigliani and Miller propositions, the key assumptions underlying them, and their relevance to capital structure decisions.

Problem 2: Lodh Ltd has $500 million of debt outstanding at an interest rate of 10 per cent. What is the present value of the debt tax shield if the debt has no maturity and if Lodh Ltd is subject to a 30 per cent company tax rate?

Reference no: EM132795520

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