I need help with question 24

Section B 22. (a) Farside Corporation follows a strict residual dividend policy. Its optimal capital structure is 75% debt 25% equity (ie the DE ratio-3). Farside's earnings for the year $150,000. If Farside's capital budget for the coming year is $750,000, will spending possible with no new equity issued (i.. using internal funding only)? million. Earmings totaled S42 million. Borrowing for the coming year is planned What is the planned capital budget? What is the target (optimal) capital structure it pay a dividend? If so, how much? What is the maximum amount of capital (b) Suppose, for the year just ended, Contrarian declared dividends totaling $10.5 at $13 million. Assume Contrarian uses a strict residual dividend policy. implicit in these calculations? 23. The Kimberly Corporation is currently a zero growth firm with an expected EBIT of $100,000 and zero debt financing, and the cost of equity to an unleveled firm in the same risk class is 16.0 percent. (a). No taxes are currently imposed on Kimberly's earnings. What is the value of the firm (Vu)? (b) Now, assume that Kimberly still pays no taxes but now decides to use $500,000 of 12.0 percent debt financing. Write down (do not calculate) the value of the firm according to the MM specification and explain (in one, very short sentence why you can do so. (c) At the level of debt in part (b) (i.e. $500,000), Kimberly's cost of levered equity (Re-L)-32%. (i) By considering the cash flow to equity investors in firm L, calculate the value of this levered firm's equity (Eu), and show that Vi- E+D. (ii) Name (i.e., write down) the MM proposition that was used to calculate RE 24. Consider the information in problem 23 (especially 23(b)), except that the firms earnings are subject to a 30% corporate tax rate. Find the value of the firm according to MM with taxes. Name the proposition used to find the firm's value