Company G expects its EBIT to be $92,000 every year forever. The firm can borrow at 9%. It currently has no debt, and its cost of equity is 25%. The tax rate is 35%. The firm is considering borrowing $ 60,000 in debt to achieve a new capital structure. a) What is the value of the firm in current capital structure? b) What will the value be if the company borrows $60,000 and uses the proceeds to repurchase shares? c) What is the cost of equity after the change of capital structure? d) What is its WACC after the change of capital structure?
Company G expects its EBIT to be $92,000 every year forever. The firm can borrow at...
Elzear & Co. expects its EBIT to be $83,000 every year forever. The firm can borrow at 11%. Elzear currently has no debt, and its cost of equity is 15%. If the tax rate is 35%, what is the value of the firm? Value of the firm =? What will the value be if the company borrows $144,000 and uses the proceeds to repurchase shares? Value of the firm = ?
Cede & Co. expects its EBIT to be $80,343 every year forever. The firm can borrow at 9%. Cede currently has no debt, and its cost of equity is 25%. The tax rate is 34%. What is the firm's cost of equity capital after borrowing $45,000 and using the proceeds to repurchase shares (i.e., after recapitalization)? (Answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations.)
O'Connell & Co. expects its EBIT to be $75,000 every year forever. The firm can borrow at 10 percent. O'Connell currently has no debt, and its cost of equity is 14 percent and the tax rate is 35 percent. The company borrows $152,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Cost of equity 15.130% What is...
Meyer & Co. expects its EBIT to be $75,000 every year forever. The firm can borrow at 10 percent. Meyer currently has no debt, and its cost of equity is 14 percent and the tax rate is 35 percent. The company borrows $152,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %...
Cede & Co. expects its EBIT to be $64,000 every year forever. The firm can borrow at 8 percent. The firm currently has no debt, its cost of equity is 14 percent, and the tax rate is 35 percent. Assume the firm borrows $171,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity...
Meyer & Co. expects its EBIT to be $127,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 14 percent and the tax rate is 21 percent. The company borrows $177,000 and uses the proceeds to repurchase shares. a. What is the cost of equity after recapitalization? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)...
Meyer & Co. expects its EBIT to be $103,000 every year forever. The firm can borrow at 6 percent. The company currently has no debt, and its cost of equity is 10 percent and the tax rate is 25 percent. The company borrows $159,000 and uses the proceeds to repurchase shares. a. What is the cost of equity after recapitalization? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b....
Meyer & Co. expects its EBIT to be $115,000 every year forever. The firm can borrow at 9 percent. The company currently has no debt, and its cost of equity is 13 percent and the tax rate is 23 percent. The company borrows $168,000 and uses the proceeds to repurchase shares. a. What is the cost of equity after recapitalization? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)...
Meyer & Co. expects its EBIT to be $95,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 13 percent and the tax rate is 23 percent. The company borrows $153,000 and uses the proceeds to repurchase shares. A) What is the cost of equity after recapitalization? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) B)...
Bruce & Co. expects its EBIT to be $74,000 every year forever. The company can borrow at 7 percent. The company currently has no debt, its cost of equity is 12 percent, and the tax rate is 35 percent. The company borrows $125,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost...