Question
QC corporation expects an EBIT of $8,500 every year forever. QC currently has no debt, and its cost of equity is 15%. The firm can
QC corporation expects an EBIT of $8,500 every year forever. QC currently has no debt, and its cost of equity is 15%. The firm can borrow at 12%. If the corporate tax rate is 40%, what is the value of the firm? What will the value be if QC decides to borrow $10,000 debt and use it to buy back equity?
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The Wealthtech Book The FinTech Handbook For Investors Entrepreneurs And Finance Visionaries
Authors: Susanne Chishti, Thomas Puschmann
1st Edition
1119362156, 978-1119362159
