Firm H is planning to raise equity and use the generated cash to retire $20...
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Accounting
Firm H is planning to raise equity and use the generated cash to retire $20 million dollar of debt immediately. The firm tax rate is 40%. Riske free rate is 3% and the market portfolio risk premium is 6% .
a. Calculate the debt tax shield that is generated from the retirement of this amount of debt
b. In this case, would you expect the EPS to decrease, increase or stay the same?
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