Question 30 0.8 pts Your firm has a before-tax return of $2600 on an investment...
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Question 30 0.8 pts Your firm has a before-tax return of $2600 on an investment of $1980 and a marginal tax rate of 35%. The overall cost of capital is 9%. The firm currently uses 40% debt financing with an expected return of 6%. If it increases its use of debt to 50%, the expected return on the debt will be 6.5%. By how much will the present value of the tax subsidy increase (decrease) if the firm adopts the new capital structure? O 18.51 O 13.25 0 25.13 O 6.62 Question 30 0.8 pts Your firm has a before-tax return of $2600 on an investment of $1980 and a marginal tax rate of 35%. The overall cost of capital is 9%. The firm currently uses 40% debt financing with an expected return of 6%. If it increases its use of debt to 50%, the expected return on the debt will be 6.5%. By how much will the present value of the tax subsidy increase (decrease) if the firm adopts the new capital structure? O 18.51 O 13.25 0 25.13 O 6.62
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