The increase in the value of the company after the loan

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Reference no: EM132071446

Bigelli SpA is financed entirely with equity. The company is considering a loan of €1 million. The loan will be repaid in equal instalments over the next 2 years, and it has an 8 per cent interest rate. The company’s tax rate is 35 per cent. According to MM Proposition I with taxes, what would be the increase in the value of the company after the loan?

Reference no: EM132071446

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