Question
the company's profits are driven by the amount of work Sally does. If she works 55 hours each week, the company's EBIT will be $565,000
the company's profits are driven by the amount of work Sally does. If she works 55 hours each week, the company's EBIT will be $565,000 per year. if she works a 65-hour week, the company's EBIT will be $655,000 per year. The company is currently worth $3.35 million. The company needs a cash infusion of $1.45 million and can issue equity or issue debt with an interest rate of 9%. Assume there are no corporate taxes.
a. What are the cash flows to sally for each scenario? (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
Debt issue and 55hr week: ______
Debt issue and 65hr week: _______
Equity issue and 55hr week: _______
Equity issue and 65hr week: ________
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