Solution for Principles of Corporate Finance 7E CH18精品分析.docVIP

CHAPTER 18 How Much Should a Firm Borrow? Answers to Practice Questions For $1 of debt income: Corporate tax = $0 Personal tax = 0.44?$1 = $0.440 Total = $0.440 For $1 of equity income, with all capital gains realized immediately: Corporate tax = 0.35?$1 = $0.350 Personal tax = 0.44?0.5?[$1 – (0.35?$1)] + 0.20?0.5?[$1 – (0.35?$1)] = $0.208 Total = $0.558 For $1 of equity income, with all capital gains deferred forever: Corporate tax = 0.35?$1 = $0.350 Personal tax = 0.44?0.5?[$1 – (0.35?$1)] = $0.143 Total = $0.493 Consider a firm that is levered, has perpetual expected cash flow X, and h