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Linkcomn expects an Eamings before Taxes of 750000$ every year. The firm currently has 100% Equity and cost of raising equity is 12%. If the
Linkcomn expects an Eamings before Taxes of 750000$ every year. The firm currently has 100% Equity and cost of raising equity is 12%. If the company can borrow debt with an interest of 10%. What will be the value of the company if the company takes on a debt equal to 60% of its levered value? What will be the value of the company if the company takes on a debt equal to 40% of its levered value? Assume the company's tax rate is 40% (Must show the steps of calculation)
Linkcomn expects an Eamings before Taxes of 750000$ every year. The firm currently has 100% Equity and cost of raising equity is 12%. If the company can borrow debt with an interest of 10%. What will be the value of the
company if the company takes on a debt equal to 60% of its levered value? What will be the value of the company if the company takes on a debt equal to 40% of its levered value? Assume the company's tax rate is 40% (Must
show the steps of calculation)
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