Suppose that LilyMac Photography expects EBIT to be approximately $210,000 per year for the foreseeable future, and that it has 1, 000 10-year, 9percent annual coupon bonds outstanding. What would the appropriate taxrate be for use in the calculation of the debt component of Lily Mac's WACC?

Given that Lily Mac photography has the following :Total number of bonds = 1000Face value=…

Answered: Suppose that LilyMac Photography…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose that LilyMac Photography expects EBIT to be approximately $ 210,000 per year for the foreseeable future, and that it has 1,000 10-year, 9 percent annual coupon bonds outstanding. What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC?