Meyer & Co. expects its EBIT to be $114,000 every year forever. The firm can borrow at 6 percent. The company currently has no debt, and its cost of equity is 12 percent. If the tax rate is 23 percent, what is the value of the firm? 1.$799,000.00 2. $389,000.00 3. $789,000.00 C4. $731,500.00
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- QUESTION 6 hange Corporation expects an EBIT of $33,000 every year forever. The company currently has no debt, and its cost of equity is 11 percent. The corporate tax rate is 23 percent. What is the current value of the company? 1.$231,000.00 2. $331,000.00 3. $257,565.00 4. $284,130.00Question 1 Bloom Company Limited expects its EBIT to be $80,000 every year forever. The firm can borrow at 9 percent. The firm currently has no debt, and its cost of equity is 13 percent. The tax rate is 35 percent. The firm will borrow $100,000 and use the proceeds to repurchase shares. You are required to answer the following: (a) What is the value of the unlevered firm? (b) What will be the value of firm after recapitalization? (c) What is the value of equity in the recapitalized firm? (d) What is the Weighted Cost of Capital of the levered firm?Question 29: MM and Taxes Tempest Corporation expects an EBIT of $37,700 every year forever. The company currently has no debt and its cost of equity is 11 percent. The tax rate is 22 percent. What is the current value of the company? Suppose the company can borrow at 6 percent. What will the value of the company be if it takes on debt equal to 50 percent of its unlevered value? What if it takes on debt equal to 100 percent of its unlevered value? What will the value of the company be if it takes on debt equal to 50 percent of its levered value? What if the company takes on debt equal to 100 percent of its levered value?
- Plz use excel Meyer & Co. expects its EBIT to be $97,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 13 percent. The tax rate is 24 percent. What is the value of the firm? What is the value if the company borrows $195,000 and uses the proceeds to repurchase shares? What is the cost of equity after recapitalization?What is the WACC? What are the implications of the firm’s decision to borrow?Question 6 "Axon Industries needs to raise $250,000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 15%, although Axon's managers believe that 8.5% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 11%.What is the cost (in USDs) to current shareholders of financing the project out of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is $500A2 cede and cos expect its ebit = 11000 every year forever. the company can borrow at 8% the company has no debt and its cost of equity is 12% and tax rate 22% The company borrows 165000. what is the cost of equity and wacc
- Question 11 For this and the next 2 questions: A firm has total assets of $15.4 million and a debt/equity ratio of 0.825. The firm's sales are $11 million, and it has total fixed costs of $4.4 million. Suppose also the firm's EBIT is $2.2 million, its tax rate is 45%, and the interest rate on all of its debt is 10%. How much debt does the firm have on its balance sheet? 1) $8.43836 million 2) $6.96164 million 3) $4.4825 million 4) Not enough information Question 12 Calculate the firm's equity multiplier ratio 1) 0.54795 2) 0.22727 3) 1.825 4) None of the aboveplz use excel and show formula Meyer & Co. expects its EBIT to be $97,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 13 percent. The tax rate is 24 percent. What is the value of the firm? What is the value if the company borrows $195,000 and uses the proceeds to repurchase shares? What is the cost of equity after recapitalization?What is the WACC? What are the implications of the firm’s decision to borrow?Question 14 General Electric expects a net income next year of $19.53 million, and a free cash flow of $22.47 million. The company has a marginal corporate tax rate of 35%. Suppose General Electric increases its leverage, such that the interest expense of the company rises by $2.6 million. How will net income change? Show your work. 2. For the same increase in interest expense in part (1), how will free cash flow change? Free cash flow will increase by $2.6 million. Free cash flow will increase by less than $2.6 million. Free cash flow will remain the same. Free cash flow will decrease by less than $2.6 million Free cash flow will decrease by $2.6 million
- "Question 3" Banana Airways. has an expected EBIT of $1,515,000 in perpetuity and tax rate of 25%. The Banana's Air management is paying 6.25% interest for $6,666,000 outstanding bond. Assuming unlevered cost of capital (Ru) is 9.19%. a. Evaluate the firm using Modigliani and Miller approach (Case (II), Proposition (1) with taxes)? { b. Find the equity value and D/E ratio?3. Problem 22-03 (Tax Shield Value) Tax Shield Value Wilde Software Development has a 9% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 3% rate after Year 3. Wilde's tax rate is 25%. Interest expenses Year Year 1 2 $75 $95 Year 3 $110 What is the horizon value of the interest tax shield? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is the total value of the interest tax shield at Year O? Do not round intermediate calculations. Round your answer to the nearest cent. $