What will be the increase in xyz market value

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Question: XYZ Corp. is about to borrow $100,000. The terms of the loan specify an annual equal repayment of principal in each of the next 8 years. The loan rate is rD = 8%, and XYZ has a corporate tax rate of TC = 40%. If the loan interest is an expense for tax purposes for XYZ, and if there are no other taxes besides corporate taxes, what will be the increase in XYZ's market value?

Reference no: EM131477251

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