An unlevered firm faces a corporate income tax rate of 25%. If the firm decides...
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Finance
An unlevered firm faces a corporate income tax rate of 25%. If the firm decides to issue bonds, it will pay an interest rate of 4%. If the firm uses the proceeds from a bond issue to retire outstanding stock, for each dollar that the firm borrows, the firm's value will ________.
Select one:
A.
increase by $1 minus $0.04 in interest expense
B.
increase by $0.25
C.
decrease by $1 minus $0.04 in interest expense
D.
decrease by $0.25
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