Principles of Corporate Finance

Capital Structure Firm Value = Value of All Equity Firm + PV Tax Shield Example All Equity Value = 600 / .10 = 6,000 PV Tax Shie ...

Capital Structure Firm Value = Value of All Equity Firm + PV Tax Shield Example All Equity Value = 600 / .10 = 6,000 PV Tax Shie ...

C.S. & Taxes (Personal & Corp) Relative Advantage Formula ( Debt vs Equity ) 1-TP (1-TPE) (1-TC) ...

C.S. & Taxes (Personal & Corp) Relative Advantage Formula ( Debt vs Equity ) 1-TP (1-TPE) (1-TC) RAF > 1 Debt RAF < ...

Example 1 All Debt All Equity Income BTCP 1.00 less TC=.46 0.00 Income BTP 1.00 Taxes TP =.5 TPE=0 0.50 After Tax Income 0.50 C. ...

Example 1 All Debt All Equity Income BTCP 1.00 1.00 less TC=.46 0.00 0.46 Income BTP 1.00 0.54 Taxes TP =.5 TPE=0 0.50 0.00 Afte ...

Example 1 All Debt All Equity Income BTCP 1.00 1.00 less TC=.46 0.00 0.46 Income BTP 1.00 0.54 Taxes TP =.5 TPE=0 0.50 0.00 Afte ...

Example 2 All Debt All Equity Income BTCP 1.00 less TC=.34 0.00 Income BTP 1.00 Taxes TP =.28 TPE=.21 0.28 After Tax Income 0.72 ...

Example 2 All Debt All Equity Income BTCP 1.00 1.00 less TC=.34 0.00 0.34 Income BTP 1.00 0.66 Taxes TP =.28 TPE=.21 0.28 0.139 ...

Example 2 All Debt All Equity Income BTCP 1.00 1.00 less TC=.34 0.00 0.34 Income BTP 1.00 0.66 Taxes TP =.28 TPE=.21 0.28 0.139 ...

wToday’s RAF & Debt vs Equity preference. wOld Tax Code 1-.28 (1-.28) (1-.34) RAF = = 1.52 C.S. & Taxes (Personal & ...

wToday’s RAF & Debt vs Equity preference. wNew Tax Code 1-.28 (1-.20) (1-.34) RAF = = 1.36 C.S. & Taxes (Personal & ...

wToday’s RAF & Debt vs Equity preference. 1-.28 (1-.20) (1-.34) RAF = = 1.36 Why are companies not all debt? C.S. & Taxe ...

Capital Structure Structure of Bond Yield Rates D E Bond Yield r ...

(^455) Weighted Average Cost of Capital without taxes (traditional view) r D V rD rE Includes Bankruptcy Risk WACC ...

Financial Distress Costs of Financial Distress - Costs arising from bankruptcy or distorted business decisions before bankruptcy ...

Financial Distress Costs of Financial Distress - Costs arising from bankruptcy or distorted business decisions before bankruptcy ...

Financial Distress Debt Market Value of The Firm unleveredValue of firm PV of interesttax shields Costs offinancial distress Val ...

Conflicts of Interest Circular File Company has $50 of 1-year debt. Circular File Company (Book Values) Net W.C. 20 50 Bonds out ...

Conflicts of Interest Circular File Company has $50 of 1-year debt. w Why does the equity have any value? w Shareholders have an ...