1. Becker Industries is considering an all equity capital structure against one with both debt and equity. The all equity capital structure would consist of 26,000 shares of stock. The debt and equity option would consist of 13,000 shares of stock plus $245,000 of debt with an interest rate of 9 percent. What is the break-even level of earnings before interest and taxes between these two options? Ignore taxes.
2. Pewter & Glass is an all equity firm that has 80,000 shares of stock outstanding. The company is in the process of borrowing $600,000 at 9 percent interest to repurchase 12,000 shares of the outstanding stock. What is the value of this firm if you ignore taxes
3. Winter's Toyland has a debt-equity ratio of 0.65. The pre-tax cost of debt is 8.7 percent and the required return on assets is 16.1 percent. What is the cost of equity if you ignore taxes? (Round to the 2nd decimal XX.XX%)
4. L.A. Clothing has expected earnings before interest and taxes of $48,900, an unlevered cost of capital of 14.5 percent, and a tax rate of 34 percent. The company also has $8,000 of debt that carries a 7 percent coupon. The debt is selling at par value. What is the value of this firm? (Round to the nearest cent