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McMillin Industries is currently 100% equity financed, has 25,000 shares outstanding at a price of $30 a share, and produces an annual EBIT of
McMillin Industries is currently 100% equity financed, has 25,000 shares outstanding at a price of $30 a share, and produces an annual EBIT of $150,000. The firm is considering issuing $300,000 of debt and repurchasing shares. The cost of debt is 12%. Ignore taxes. By how much will EPS change if the company issues the debt and EBIT remains constant? A firm has a 34% tax rate, EBIT of $400, total debt of $600, and an unlevered value of $1,000. What is the value of the firm with debt?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
