Key Lime Pie Co. expects EBIT of $300,000 every year forever. Key Lime Pie Co. currently has no debt and its cost of equity is 20%. The firm can borrow at 6%. The corporate tax rate is 33%. Value of firm = 1,005,000

Given that the firm has a value of $1,005,000 when it is all equity, what will be the value of the firm if Key Lime Pie Co. borrows $220,000 of permanent debt and uses the proceeds to buy back stock? Enter your answer rounded to two decimal places. Value of firm = 1,077,600

Given that the firm has a value of $1,005,000 when it is all equity, how can Key Lime Pie Co. maximize the value of the firm? What will be the maximum value if there are no costs to financial distress? Enter your answer rounded to two decimal places. 1336650 Correct response: 1,500,000+0.02 Click "Verify" to proceed to the next part of the question. Suppose that with $220,000 of debt, there is a 11% probability of financial distress, in which case the firm will have a present value of $300,000. What is the value of the firm in this case? Recall that the value of the firm with $220,000 debt and no costs to financial distress was $1,077,600. Enter your answer rounded to two decimal places. Number Click "Verify" to proceed Section Attempt 1 of 1 Verify Given that the firm has a value of $1,005,000 when it is all equity, how can Key Lime Pie Co. maximize the value of the firm? What will be the maximum value if there are no costs to financial distress? Enter your answer rounded to two decimal places. 1336650 Correct response: 1,500,000+0.02 Click "Verify" to proceed to the next part of the question. Suppose that with $220,000 of debt, there is a 11% probability of financial distress, in which case the firm will have a present value of $300,000. What is the value of the firm in this case? Recall that the value of the firm with $220,000 debt and no costs to financial distress was $1,077,600. Enter your answer rounded to two decimal places. Number Click "Verify" to proceed Section Attempt 1 of 1 Verify