Cede & Co. expects its EBIT to be $104,000 every year forever. The company can borrow at 8 percent. The company currently has no debt and its cost of equity is 14 percent. |
a. |
If the tax rate is 23 percent, what is the value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
b. | What will the value be if the company borrows $200,000 and uses the proceeds to repurchase shares? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Cede & Co. expects its EBIT to be $104,000 every year forever. The company can borrow...
Cede & Co. expects its EBIT to be $118,000 every year forever. The company can borrow Eat 7 percent. The company currently has no debt and its cost of equity is 14 percent. a. If the tax rate is 22 percent, what is the value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the value be if the company borrows $270,000 and uses the proceeds to repurchase...
Cede & Co. expects its EBIT to be $115,000 every year forever. The company can borrow at 7 percent. The company currently has no debt and its cost of equity is 13 percent. a. If the tax rate is 24 percent, what is the value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the value be if the company borrows $255,000 and uses the proceeds to repurchase...
Cede & Co. expects its EBIT to be $155,000 every year forever. The company can borrow at 7 percent. The company currently has no debt and its cost of equity is 14 percent and the tax rate is 23 percent. The company borrows $198,000 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.)...
Cede & Co. expects its EBIT to be $163,000 every year forever. The company can borrow at 9 percent. The company currently has no debt and its cost of equity is 15 percent and the tax rate is 25 percent. The company borrows $204,000 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....
Cede & Co. expects its EBIT to be $105,000 every year forever. The firm can borrow at 7 percent. The firm currently has no debt, and its cost of equity is 11 percent. If the tax rate is 35 percent, what is the value of the firm? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of the firm $ 620455 620455 Correct What will the value be if the company borrows $136,000...
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...
Problem 16-14 MM and Taxes Cede & Co. expects its EBIT to be $103,000 every year forever. The company can borrow at 7 percent. The company currently has no debt and its cost of equity is 13 percent. a. If the tax rate is 22 percent, what is the value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the value be if the company borrows $193,000 and...
Meyer & Co. expects its EBIT to be $110,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 14 percent. a. If the tax rate is 24 percent, what is the value of the firm? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the value be if the company borrows $230,000 and uses the proceeds to...
Meyer & Co. expects its EBIT to be $117,000 every year forever. The firm can borrow at 6 percent. The company currently has no debt, and its cost of equity is 13 percent. a. If the tax rate is 21 percent, what is the value of the firm? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the value be if the company borrows $265,000 and uses the proceeds to repurchase...
Meyer & Co. expects its EBIT to be $105,000 every year forever. The firm can borrow at 6 percent. The company currently has no debt, and its cost of equity is 13 percent. a. If the tax rate is 24 percent, what is the value of the firm? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the value be if the company borrows $205,000 and uses the proceeds to...