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Jones Co. expects its EBIT to be $234,000 every year forever. The firm can borrow at 7.5%. The firm currently has no debt and
Jones Co. expects its EBIT to be $234,000 every year forever. The firm can borrow at 7.5%. The firm currently has no debt and the cost of equity is 16%. The tax rate is 35%. 1. What is the current value of the firm? 2. What is the firm's WACC? 3. Assume that the firm borrows $84,000 1. What is the value of the firm now? 2. What is the cost of equity? 3. What is the firm's WACC?
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Financial Accounting and Reporting a Global Perspective
Authors: Michel Lebas, Herve Stolowy, Yuan Ding
4th edition
978-1408066621, 1408066629, 1408076861, 978-1408076866
