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So I have the answer of a) $8.25m and b) $8.454m. How to I answer parts c and d? Why are they different/what assumptions am
So I have the answer of a) $8.25m and b) $8.454m. How to I answer parts c and d? Why are they different/what assumptions am I making?
Strider Publishing Company, an all-equity firm, expects perpetual earnings before interest and taxes (EBIT) of $2.5 million per year. Strider's after- tax, all-equity discount rate is 20%. The firm is subject to a 34% corporate tax rate. a. b. What is the value of Strider Publishing? (10 marks) If Strider issues $600,000 of debt and uses the proceeds to repurchase stock, what will the value of the firm be? (10 marks) Explain any difference in your answers to parts a and b. (10 marks) What assumptions are you making when valuing Strider? (10 marks) c. dStep by Step Solution
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