[Solved] A company just issued $ 1 8 3 0 0 0 of pe

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A company just issued $ 1 8 3 0 0 0 of perpetual 9 % debt and used the proceeds to repurchase stock. The company

A company just issued $

183000

of perpetual

9 %

debt and used the proceeds to

repurchase stock. The company expects to generate

103000

of EBIT in perpetuity.

The company distributes all its earnings as dividends at the end of each year. The

firm's unlevered cost of capital is

11 %

and the tax rate is

30 % .

Use FTE to calculate

the value of the company's equity.

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