Respuesta :
The value of the company due to expected bankruptcy costs is, $866,000.
What is tax explain?
- Taxes are compulsory payments made by a government organization, whether local, regional, or federal, to people or businesses.
- Tax revenues are used to fund a variety of government initiatives, such as Social Security and Medicare as well as public infrastructure and services like roads and schools.
What is a tax example?
- Sales taxes, value-added taxes (VAT), taxes on any component of production or manufacturing, taxes on legal activities, and customs or import charges are a few examples.
- A sizable percentage of consumer expenditures are subject to general sales taxes.
What is the purpose of tax?
- Taxes on every aspect of production or manufacture, taxes on legal activities, general and selective sales taxes, value-added taxes (VAT), and customs or import charges are a few examples.
- A sizable amount of consumer spending is subject to general sales taxes, which are levies.
According to M & M proportion I with taxes, the value of the levered firm is:
V (Firm) = V (Equity) + V (Debt).
= $27,900,000 + 0.24(5,900,000).
= $27,900,000 + $1,416,000.
= $29,316,000.
Total market value of the firm:
= Market value of the debt + Market value of equity.
= $5,900,000 + stock outstanding × Selling price per share.
= $5,900,000 + 410,000 × $55 per share.
= $28,450,000.
With non-marketed claims, such as bankruptcy costs, we would expect the two values to be the same.
The differences are the non-marketed claims:
Expected bankruptcy costs = $29,316,000 - $28,450,000.
= $866,000.
Learn more about tax here:
https://brainly.com/question/25783927
#SPJ4
