Xyz corp is about to borrow 100000 the terms of the loan, Finance Basics

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Xyz corp is about to borrow 100000 the terms of the loan

Question: XYZ Corp. is about to borrow $100,000. The terms of the loan specify an annual equal repayment of principal in each of the next 8 years. The loan rate is rD = 8%, and XYZ has a corporate tax rate of TC = 40%. If the loan interest is an expense for tax purposes for XYZ, and if there are no other taxes besides corporate taxes, what will be the increase in XYZ's market value?

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Finance Basics: Xyz corp is about to borrow 100000 the terms of the loan

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Finance Basics: Xyz corp is about to borrow 100000 the terms of the loan

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