Business, 20.03.2020 10:12, angel41vgg

Change Corporation expects an EBIT of $39,000 every year forever. The company currently has no debt, and its cost of equity is 14 percent. The corporate tax rate is 24 percent.

a. What is the current value of the company?
b. Suppose the company can borrow at 7 percent. What will the value of the firm be if the company takes on debt equal to 40 percent of its unlevered value?
c. Suppose the company can borrow at 7 percent. What will the value of the firm be if the company takes on debt equal to 100 percent of its unlevered value?
d. What will the value of the firm be if the company takes on debt equal to 40 percent of its levered value?
e. What will the value of the firm be if the company takes on debt equal to 100 percent of its levered value?

Answers: 3

Show answers

Other questions on the subject: Business

Business, 21.06.2019 15:00, iviestrong7430

Becky fenton has 40/80/40 automobile insurance coverage. if two other people are awarded $75,000 each for injuries in an auto accident in which becky was judged at fault, how much of this judgment would the insurance cover?

Answers: 1

continue

Business, 21.06.2019 17:40, kimutaitanui2228

Which of the following best explains cost-push inflation? a. increasing wages for workers drive up the cost of production, forcing producers to charge more to meet their costs. b. consumers demand goods faster than they can be supplied, increasing competition among buyers. c. rising prices for goods and services reduce spending power and cut into consumer demand. d. wages drop so that workers have to spend a higher percentage of income on the cost of necessities.2b2t

Answers: 1

continue

Business, 21.06.2019 19:50, Taiyou

The u. s. stock market has returned an average of about 9% per year since 1900. this return works out to a real return (i. e., adjusted for inflation) of approximately 6% per year. if you invest $100,000 and you earn 6% a year on it, how much real purchasing power will you have in 30 years?

Answers: 2

continue

Business, 21.06.2019 20:40, brai9206

Which of the following explains why the government sets a required reserve ratio for private banks? a. to allow the government to control the interest rate charged on loans. b. to prevent banks from printing too much money and causing inflation. c. to make sure banks don't run out of money when customers make withdrawals. d. to enable the regulation of risk levels in the decision process of offering loans. 2b2t

Answers: 1

continue

Do you know the correct answer?

Change Corporation expects an EBIT of $39,000 every year forever. The company currently has no debt,...