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The change in firm value in the presence of corporate taxes is?

Updated: 8/17/2019
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Sanjeewa9

Lvl 1
13y ago

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This is Wrong ---> Negative because of the increased risk of default and fewer shares outstanding

The answer is

:positive as equityholders gain the tax shield on the debt interest.

Just took a quiz and got the answer wrong because of this... but it gave the correct answer for me to share.

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13y ago
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Q: The change in firm value in the presence of corporate taxes is?
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