Question
14.Meyer & Co. expects its EBIT to be $83,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt,
14.Meyer & Co. expects its EBIT to be $83,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 13 percent. If the tax rate is 35 percent, what is the value of the firm? What will the value be if the company borrows $125,000 and uses the proceeds to repurchase shares?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
16th edition
125927716X, 978-1259687969, 1259687961, 978-1259277160
