Luna Park Ltd is planning to raise $25,000,000 in perpetual debt at 11% to partially finance the expansion of their amusement park business. They
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5.

Luna Park Ltd is planning to raise $25,000,000 in perpetual debt at 11% to partially finance the expansion of their amusement park business. They have just received an offer from the Dubbo

City Council to raise the financing for them at 8% if they build a new amusement park in Dubbo. What is the total added value of debt financing to Luna Park Ltd if their tax rate is 34% and Dubbo City Council raises it for them? A) $ 8,500,000 B) $12,000,000 C) $13,000,000 D) $16,500,000 E) There is no value to the scheme.
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Uploaded by: wc1260

Subject: Business, Finance

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