Question
Elzear & Co. expects its EBIT to be $75,000 every year forever. The firm can borrow at 10%. Elzear currently has no debt, and its
Elzear & Co. expects its EBIT to be $75,000 every year forever. The firm can borrow at 10%. Elzear currently has no debt, and its cost of equity is 14%. (Round the final answers to 2 decimal places. Omit $ sign in your response.)
If the tax rate is 35%, what is the value of the firm?
Value of the firm $
What will the value be if the company borrows $152,000 and uses the proceeds to repurchase shares?
Value of the firm $
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Fundamentals Of Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan, Gordon Roberts, J. Ari Pandes, Thomas Holloway
10th Canadian Edition
1259654753, 9781259654756
