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    Corporate Finance Study Set 5
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    Exam 18: Debt and Taxes
  5. Question
    Consider the Following Formula: V<sub>L</sub> = V<sub>U</sub> + τ<Sub>c</sub>D
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Consider the Following Formula: VL = VU + τcD

Question 19

Question 19

Multiple Choice

Consider the following formula: VL = VU + τcD
The term τcD represents


A) the present value of the interest tax shield.
B) the value of firm with leverage.
C) the present value of the future interest payments.
D) the interest tax shield each year.

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