Question

A firm is analyzing two possible capital structureslong dash30 and 50 percent debt ratios. the firm has total assets of​ $5,000,000 and common stock valued at​ $50 per share. the firm has a marginal tax rate of 40 percent on ordinary income. if the interest rate on debt is 7 percent and 9 percent for the 30 percent and the 50 percent debt​ ratios, respectively, the amount of interest on the debt under each of the capital structures being considered would be​ ________.

Answer 1

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