ASAP as soon as possible

Question 4 a) The market value of a firm that has $400,000 in debt is $1,000,000. The expected value of EBIT is a perpetuity. The interest rate on debt (pretax) is 10%. The company is subject to a 30% tax rate. If the company were 100% equity financed, the equity holders would have a 20% required return. Calculate the market value of the firm if it were 100% equity financed. (5 marks) 1. 11. Calculate the company Earnings Before Interest and Tax (EBIT) (6 marks) 111 Calculate net income of the company (2 marks) b) Consider the following information for two all-equity firm AL and BL: Shares outstanding Price per share Firm AL 2.000 RM 40 Firm BL 6,000 RM 30 Firm AL estimates that the value of the synergistic benefit from acquiring Firm BL is RM 6,000. Firm BL indicated that it would accept cash purchase offer of RM 35 per share. Decide whether firm AL should proceed with the merger or not. (6 marks) c) Elaborate the THREE (3) types of merger with examples (6 marks)