2. 16.3 M&M proposition I (with company taxes) Gympe expects an EBIT of $10 000 every year...

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2. 16.3 M&M proposition I (with company taxes) Gympe expects an EBIT of $10 000 every year forever. Gympe can borrow at 7 per cent.

Suppose Gympe currently has no debt, and its cost of equity is 17 per cent. If the company tax rate is 30 per cent, what is the value of the firm? What will the value be if Gympe borrows $15 000 and uses the proceeds to repurchase shares?

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Fundamentals Of Corporate Finance

ISBN: 9781743768051

8th Edition

Authors: Stephen A. Ross, Rowan Trayler, Charles Koh, Gerhard Hambusch, Kristoffer Glover, Randolph W. Westerfield, Bradford D. Jordan

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Question Posted: Oct 03, 2024 06:02 AM

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2. 16.3 M&M proposition I (with company taxes) Gympe expects an EBIT of $10 000 every year...

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Fundamentals Of Corporate Finance

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