question 59

11.07% 9.34% 8.80% 59 1563 points Mary owns 100 percent of a gift shop with an equity value of $150,000 If she keeps the shop open 5 days a week. EBIT is $75,000. If the shop remains open 6 days a week, EBIT increases to $92.000 annually. Mary needs an additional $50,000 which she can raise today by either selling stock or issuing debt at an interest rate of 7 percent. The principal amount would be repaid in equal annual payments at the end of the next five years. Ignore takes. What will be the cash flow for the next year to Mary if she issues stock to another individual, remains open 6 days a week, and distributes all the residual cash flow to the shareholders? $92,000 $42.000 $69,000 $61,333 $58.750 60 1.563 points If a firm is unlevered and has a cost of equity capital of 13.7 percent, what would be the cost of equity if its debt equity ratio was revised to 4 The expected cost of debt is 7.4 percent and there are no taxes 15.67 percent 16,36 percent 16 09 percent