Suppose the corporate tax rate for Company A is 38%. Consider a firm that earns...
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Suppose the corporate tax rate for Company A is 38%. Consider a firm that earns $1,103 before interest and taxes each year with no risk. The firms capital expenditures equal its depreciation expenses each year, and it will have no changes to its net working capital. The risk-free interest rate is 3.57%. Suppose the firm makes interest payments of $473 per year. What is the difference between the total value of the firm with leverage and without leverage? NOTE: Submit your answers with 4 decimals after the dot.
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