Question
Sunshine Trading Company (STC) has an expected EBIT of $20,000 in perpetuity, and a tax rate of 40%. Interest rate on STCs $45,000 debt is
Sunshine Trading Company (STC) has an expected EBIT of $20,000 in perpetuity, and a tax rate of 40%. Interest rate on STCs $45,000 debt is 8%, and its WACC is 10%. Blackstone Inc (BI) is an all-equity firm, which is identical to STC, except for the capital structure.
(1) What is the value of STC?
(2) What is the value of BI?
(3) What is the rate of return on BI shares?
(4) What is the rate of return on STC shares?
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Gapenskis Fundamentals Of Healthcare Finance
Authors: Paula H. Song, Kristin L. Reiter
3rd Edition
1567939759, 978-1567939750
