Question
EBIT = $400,000, T = 40%, g = 4%, rsU= 15% , rd= 5%, Debt = $1.2M. Required reinvestment in net operating assets = 10%
EBIT = $400,000, T = 40%, g = 4%, rsU= 15% , rd= 5%, Debt = $1.2M.
Required reinvestment in net operating assets = 10% of EBIT
Based on the above information, what is the value of theunleveredcompany, VU, if EBIT grows at 4% according to the extension of MM by including the growth?
a.$1.82M
b.$2.18M
c.$1.60M
d.$1.34M
e.$2.07
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Contemporary Financial Management
Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao
13th edition
1285198840, 978-1285198842
