### Table 1 : Summary of the main results regarding the components of the costs of capital and the values of the levered and unlevered firms with information uncertainty

### Table III). Therefore, if the typical mid-90s firm levered up to its kink, net tax benefits would constitute 8.2

2000

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### Table 4. Value of tax shields (VTS) for a hypothetical firm with no growth. Application of the seven theories to the example in table 3. Beta unlevered = 1. Ku = 10%. D = 500. Our proposed method, Modigliani and Miller (1963) and Myers (1974) compute the value of tax shield equal to 200 (D T = 500 x 0.4 = 200), the correct value. All the other methods result in a value of the tax shield too low.

"... In PAGE 19: ... The value of the tax shield is exactly the difference between the present value of the government claim of the levered firm and the present value of the government claim of the unlevered firm. Table4 reports the estimated value of the equity for the levered firm, the present value of tax shields, the cost of equity, the WACC for the levered and unlevered firm, and the implied value of the levered beta for each of the seven approaches. Our proposed method, Modigliani and Miller (1963) and Myers (1974) compute the value of tax shield equal to $200 (D T = 500 x 0.... ..."

### Table 6. Value of tax shields (VTS) for a hypothetical firm with constant growth. Application of the seven theories to the example of table 5. Beta unlevered = 1. Ku = 10%. g = 5% Our proposed method computes the value of tax shield equal to $400. The methods of Modigliani and Miller (1963) and Myers (1974) result in a value of the tax shield that is too high (even higher than the debt value). All the other methods result in a value of the estimated tax shield that is too low.

"... In PAGE 19: ... However, the cash flows vary. Table6 reports the estimated value of the equity for the levered firm, the present value of tax shields, the cost of equity, the WACC, the WACC before taxes, the implied value of the levered beta, and the debt to equity ratio for each of the seven approaches. Our proposed method computes the value of tax shield equal to $400.... ..."

### Table 4 Policy Levers

"... In PAGE 27: ... We expect this gr owth to make it much easier for us to achieve dynamic equilibrium with respect to state resource use, presuming that budget growth is not offset by enrollment growth. Table4 presents possible policy levers for sensitivity tests and reasonable ranges withi n which to test sensitivity. ... ..."

### Table 6 Policy Levers

"... In PAGE 30: ... Figure 9 Local required tax effort 30 32 34 36 38 40 42 44 46 48 50 1995 1997 1999 2001 2003 2005 Y ear R e quired Local Effort (Mills) 85% 90% 95% 100% Simulation 2: Unintended Consequences For the second sample simulation, we use the model that includes effects on non - litigant districts and focus our attention on their plight in particular. Table6... ..."

### Table 8 Operating Performance Around the Asian Crisis

"... In PAGE 36: ... Finally, changes in net property, plant, and equipment reveal changes in investment policy. Table8 reports results from tests examining the effects of each debt type on different aspects of operating performance. These regressions also include industry and country dummy variables, but the coefficients are not reported to conserve space.... In PAGE 36: ... However, the negative coefficient for SLC debt (significant at the 10% level) is consistent with the financial distress hypothesis and the prior evidence suggesting that SLC debt had a differential adverse effect on performance. The second column of Table8 repeats the analysis using changes in operating margin around the crisis as the dependent variable. In this case, the only significant relation is the weak negative effect of SLC debt (again consistent with the prior findings).... In PAGE 36: ... In this case, the only significant relation is the weak negative effect of SLC debt (again consistent with the prior findings). Results in the third column of Table8 reveal a positive relation between FC debt and changes in net PPE, our proxy for changes in investment. This finding also supports the theory of Bris and Koskinen (2002) which predicts that prior to a depreciation exporting firms will underinvest due to the debt overhang problem, but once a depreciation occurs these highly levered firms will undertake the foregone investments.... In PAGE 36: ... This finding also supports the theory of Bris and Koskinen (2002) which predicts that prior to a depreciation exporting firms will underinvest due to the debt overhang problem, but once a depreciation occurs these highly levered firms will undertake the foregone investments. Overall, the results in Table8 are consistent with findings of Andrade and Kaplan (1998) that financial distress costs are relatively small even for highly levered firms. To make sure the results presented in this section are robust we also try other specifications not reported here.... In PAGE 38: ... 46 All of the coefficients on the debt variables retain their signs and significance with the following exceptions: In column (1) of Table 7 the magnitude of the coefficient for SLC debt is reduced so the difference from the other debt levels is significant only at the 10% level. In column (1) Table8 , the coefficient on SLC debt is no longer significant. In column (2) of Table 8, the coefficient on NLC debt becomes significantly negative at the 10% level, and the coefficient on SLC debt changes from being ... In PAGE 38: ... In column (1) Table 8, the coefficient on SLC debt is no longer significant. In column (2) of Table8 , the coefficient on NLC debt becomes significantly negative at the 10% level, and the coefficient on SLC debt changes from being ... ..."

### TABLE 2 Team Effectiveness Levers and Recommendations

2006

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