Part III Valuing Real Assets
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Transcript of Part III Valuing Real Assets
Mark Grinblatt Sheridan TitmanFinancial Markets and Corporate Strategy, 2/e
McGraw-Hill/Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Mark Grinblatt Sheridan TitmanFinancial Markets and Corporate Strategy, 2/e
McGraw-Hill/Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Part III
Valuing Real Assets
Mark Grinblatt Sheridan TitmanFinancial Markets and Corporate Strategy, 2/e
McGraw-Hill/Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Chapter 13
Corporate Taxes and the Impact of Financing on Real Asset Valuation
Mark Grinblatt Sheridan TitmanFinancial Markets and Corporate Strategy, 2/e
McGraw-Hill/Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Exhibit 13.1: Balance Sheet for a Firm with Leverage When Debt Interest Is Corporate Tax Deductible
Assets
Debt Tax Shield (TX) TcD
Unlevered Assets (UA) D + E - TcD
Liabilities and Equity
Debt D
Equity E
Mark Grinblatt Sheridan TitmanFinancial Markets and Corporate Strategy, 2/e
McGraw-Hill/Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Exhibit 13.2: Sources of Shareholder Value
Mark Grinblatt Sheridan TitmanFinancial Markets and Corporate Strategy, 2/e
McGraw-Hill/Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Exhibit 13.3: The Unlevered Cash Flows and Debt Tax Shields for Acme Industries
Note: r DS represents the promised interest rate on the senior debt and r DJ is the promised interest rate on the junior subordinated debt.
Mark Grinblatt Sheridan TitmanFinancial Markets and Corporate Strategy, 2/e
McGraw-Hill/Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Exhibit 13.4: WACC, Cost of Equity, and Cost of Debt vs. With No Taxes E
D
Mark Grinblatt Sheridan TitmanFinancial Markets and Corporate Strategy, 2/e
McGraw-Hill/Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Exhibit 13.5: WACC, Cost of Equity, and Cost of Debt vs. with Corporate Taxes E
D