Listen in MM proposition topic it says that Vl=Vu + tax shield and tax shield= value of debt * tax rate which does not make sense because tax shield should be interest payments * tax rate作者: ShooterMcCFA 时间: 2013-4-16 09:30
cp how come that be the amount of tax that u save is the interest payment that u r able to deduct from your income. for example if i can deduct 100 dollar interest payment before calculating tax then ur saving is 100 * tax rate is that not tax shield and it makes logical sense? what is the logic behind the formula u mentioned
