Fin630 session4 discussion question 2 with 2 response

Aug 12th, 2016
Studypool Tutor
University of Maryland - University College
Price: $10 USD

Tutor description

Interest Rate Tax Shield Dq2 Imagine two independently owned gas stations standing next to each other and selling gas (and other goods) at about the same price, so they have the same revenues, cost structure and effective tax rate of 35%. Assume that every year they have average EBIT of $ 500,000 (I know, it's quite optimistic) without any anticipated growth. One owner finances all operations out of own pocket, while another borrows $ 500,000 for five years and refinances this debt every five years without repaying principal during the time of the loan. The principal is repaid at the end by newly borrowed money. Discuss the difference in value (if any) of these two stations.

Word Count: 599
Showing Page: 1/1
Week4Interest Rate Tax ShieldDq2Imagine two independently owned gas stations standing next to each other and selling gas (and othergoods) at about the same price, so they have the same revenues, cost structure and effective tax rate of35%. Assume that every year they have average EBIT of $ 500

Review from student

Studypool Student
" all I can say is wow very fast work, great work thanks "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1823 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors