AAgency Costs and Capital Structure Galaxy Enterprises has earnings before interest

and taxes of $$10,000,000$ and $$100,000,000$ of debt outstanding with a required rate of

return of $8\mathrm{.}5\%.$ The required rate of return on assets in the industry is $16\%.$ The corporate

tax rate is $26\%,$ but there are no personal taxes. The present value of Galaxy's bankruptcy

costs is $$18,000,000.$ Compute Galaxy's firm value.

The present value of Galaxy's debt tax shields is $

$($Round to the nearest dollar.$)$

If Galaxy has no debt, the value of the firm is $

$($Round to the nearest dollar.$)$

Since Galaxy currently has $$100,000,000$ of debt outstanding, the value of the firm is $

$($Round to the nearest dollar.$)$gency Costs and Capital Structure$$Galaxy Enterprises has earnings before interest and taxes of $$$$10$ comma $000$ comma $000$ and $ $100$ comma $000$ comma $000$ of debt outstanding with a required rate of return of $8\mathrm{.}5\%.$ The required rate of return on assets in the industry is $16\%.$ The corporate tax rate is $26\%,$ but there are no personal taxes. The present value of$$ Galaxy's bankruptcy costs is $ $18$ comma $000$ comma $000.$ Compute$$ Galaxy's firm value.