Assume that Microsoft has a total market value of $ 299.5 billion and a marginal tax...
Assume that Microsoft has a total market value of $ 299.5 billion and a marginal tax rate of 35 %. If it permanently changes its leverage from no debt by taking on new debt in the amount of 12.9 % of its current market value, what is the present value of the tax shield it will create?
Homework Answers
PV of tax shield = current market value*debt%age*tax rate = 299.5*0.129*0.35=13.5524bn
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Assume that Microsoft has a total market value of $ 299.5
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