Question
Kitto Electronics has an EBIT of $200,000, a growth rate of 6%, and its tax rate is 40%. In order to support growth, Kitto must
Kitto Electronics has an EBIT of $200,000, a growth rate of 6%, and its tax rate is 40%. In order to support growth, Kitto must reinvest 20% of its EBIT in net operating assets. Kitto has $300,000 in 8% debt outstanding, and a similar company with no debt has a cost of equity of 11%. Using the compressed adjusted present value model, what is Kitto's value of equity?
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Governing Global Finance
Authors: Michele Fratianni, Paolo Savona
1st Edition
1138742147, 978-1138742147
