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Sagot :
(d) Lower.
Tax shield benefit is increasing up the value of the firm. Unlevered firms doesn't have the advantage of tax benefits so their value remains lower.
What are levered firms?
Financial leverage in firms refers to the use of borrowed funds to finance activities in order to create income, typically in the form of corporate bonds or loans. Businesses "leverage" borrowed money by leveraging it to grow their revenue and boost their company's value. A firm becomes increasingly "leveraged" the more money it borrows. Ideally, the income from using borrowed money should be greater than the expense of borrowing it (i.e., interest payments).
How unlevered firms work?
Unlevered refers to removing consideration for debt or leverage. Un-levering eliminates the cost of financing and interest on outstanding debt from analysis because businesses must pay those costs. As a result, while calculating unlevered free cash flow (UFCF), you do not deduct the interest expense.
Complete Question:
The value of a levered firm will be greater than the value of an identical unlevered firm because the levered firm's taxes will be _____.
(a) deferred
(b) higher
(c) audited
(d) lower
Know more about leverage here:
https://brainly.com/question/14988262
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