Value of a levered firm increases

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In the moddglianni -Miller model with corporate taxes, the value of a levered firm increases with rising debt. What would be your reading of the following estimated equation for the value of the levered firm (VL)? Where, VU is value of the unlevered, Tc is coporate tax rate and D is debt/value ratio.

VL = VU + TcD = VU + 0.70D

Reference no: EM132558483

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