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Michaels is a levered firm with $55,000 of debt. Michaels pays tax at the rate of 30%. The firm faces EBIT scenarios of recession, normal,
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Michaels is a levered firm with $55,000 of debt. Michaels pays tax at the rate of 30%. The firm faces EBIT scenarios of recession, normal, and boom. {Note: EBIT = earnings before interest and tax, $ Interest = dollar amount of interest owed on the debt, NIBT = net income before tax, NI = net income, EPS = earnings per share}. Assume that firms with zero or negative NIBT pay zero in tax.
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