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Given: Company AAA: - Unlevered. - Annual income is tax-free. - $11.5 million in EBIT is expected to be earned every year forever. - No
Given: Company AAA: - Unlevered. - Annual income is tax-free. - \$11.5 million in EBIT is expected to be earned every year forever. - No net income is retained, and the full amount is used to pay dividends. 3.8 million shares are currently being traded in the market. Each share currently sells for $62. Company ZZZ: - Levered. - Annual income is tax-free. - \$63 million is the market value of its debt. The debt has the following characteristics: neverending interest payments, 4% interest rate. - $11.5 million in EBIT is expected to be earned every year forever. - No net income is retained, and the full amount is used to pay dividends.2.1 million shares are currently being traded in the market. Each share currently sells for $79. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
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