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8. Meyer & Co. expects its EBIT to be $75,000 every year forever. The firm can borrow at 10 percent. Meyer currently has no debt,
8.
Meyer & Co. expects its EBIT to be $75,000 every year forever. The firm can borrow at 10 percent. Meyer currently has no debt, and its cost of equity is 14 percent. |
If the tax rate is 35 percent, what is the value of the firm? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) |
Value of the firm | $ |
What will the value be if the company borrows $152,000 and uses the proceeds to repurchase shares? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) |
Value of the firm | $ |
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