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Please fill out this table given this info Currently the company has value of S5 million with outstanding shares of 100,000. The company generates $1,538,461.5
Please fill out this table given this info
Currently the company has value of S5 million with outstanding shares of 100,000. The company generates $1,538,461.5 in earnings before interest and taxes (EBIT) in perpetuity. The corporate tax rate is 35 percent and all earnings are paid as dividends. The company is considering the effect of $2 million and S2.5 million debt -equity swap on its cost of capital and its value. The cost of debt is 10 percent and the cost of capital is currently 20 percent. Any investment in net working capital and capital expenditure is equal to its depreciation allowances. The corporate tax rate is 35 percent. Table 3 Current Debt Debt Capital Structure Cash Flow to Debtholders (interest) Pretax Cost of Debt Value of Debt (Interest/Rd Cash Flow to Shareholders EBIT Interest Pretax Profit axes D 35% Net Income + Depreciation - change in NWC - Capital ex Cash Flow to Shareholders Cost of Equit Value of Equity Value of Equity plus Value of Debt
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