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please do the blank and wrong questions Rozanski Co. currently has EBIT of $40,000 and is all equity financed. EBIT is expected to stay at
please do the blank and wrong questions
Rozanski Co. currently has EBIT of $40,000 and is all equity financed. EBIT is expected to stay at this level indefinitely. The firm pays corporate taxes equal to 32% of taxable income. The cost of equity for this firm is 11%. What is the market value of the firm? Enter your answer rounded to two decimal places. 247272.73 Correct response: 247, 272.730.01 Click "Verify" to proceed to the next part of the question. This question has parts, so you will be clicking verify 3 times. Suppose the firm has a value of $247,272.73 when it is all equity financed. Now assume the firm issues $81,000 of debt paying interest of 5% per year and uses the proceeds to retire equity. The debt is expected to be permanent. What will be the value of the firm? Enter your answer rounded to two decimal places. 222236.36 Correct response: 273,192.730.01 What will be the value of the equity after the debt issue? Enter your answer rounded to two decimal places. 141236.36 * Correct response: 192,192.7310.01 Click "Verify" to proceed to the next part of the question. Suppose that with the $81,000 of debt and no costs to financial distress the firm has a value of $273,192.73. Suppose, in addition: 1) The debt issue raises the possibility of bankruptcy. 2) The firm has a 15% chance of going bankrupt after 2 years. 3) If it goes bankrupt, it will incur bankruptcy costs of 130,000. 4) The discount rate is 11%. What is the value of the firm? Enter your answer rounded to two decimal places. Number Click "Verify" to proceedStep by Step Solution
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