Assume the tax rate is 21%. State Liquor is an all-equity financing firm. It has restructured to include $1 million in permanent debt with an interest rate of 7%. According to MM 1963 proposition, the value of the firm will increase by due to this change in its capital structure. $70,000 $700,000 $35,000 $210,000

$210,000

Explanation:

In this question, we are asked to calculate the amount to which the value of the firm

Will increase to.

Basically what we need to know here is the proposition and how it will affect the value of the firm.

According to MM proposition II , the value of the firm will increase by the debt tax shield when an all equity financed firm is restructured to include debt in the capital structure. This is called Adjusted present value.

Mathematically, this value can be calculated using the formula as follows; (Debt * Interest rate * Tax rate)/ Interest rate

We identify the interest rate as 7% and the tax rate as 21%

=( 1 M * 7% * 21%) /7% = $ 210,000

being born in poverty would limit the people's chances, opportunities and benefits.

this happen because of several things, such as:

- poor people tend to gain less access to good education and nutrition. this mean that their chance to obtain high paying jobs would also be limited.

- poor people tend to socialize with other poor people while the rich tend to socialize with other rich people. this means that simply throguh their social circle, rich people would have more business opportunities compared to the poor people.

- rich people tend to have more capital in their disposal. this would benefit them in business since it is far easier for them to fund their business operation compared to poor people.

i might look it up later.