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What would be the increase in the value of the company

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The Bellwood Company is financed entirely with equity. The company is considering a loan of $3.3 million. The loan will be repaid in equal principal instalments over the next two years and has an interest rate of 7 percent. The company's tax rate is 22 percent.

Problem 1: According to MM Proposition I with taxes, what would be the increase in the value of the company after the loan?

Reference no: EM133000695

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