Question
The current expected EBITDA of Funny co. stock is $15 million each year. The unlevered return on equity is 12%. The current debt value is
The current expected EBITDA of Funny co. stock is $15 million each year. The unlevered return on equity is 12%. The current debt value is $80 million and it is kept constant. Assume that the corporate tax rate is 26% and that there is no personal taxation. If the corporate tax rate is unexpectedly decreased to 24%, what is the equity return caused by this event?
Ans. 2.70%
Please explain in details
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The Changing Geography Of Banking And Finance
Authors: Pietro Alessandrini ,Michele Fratianni ,Alberto Zazzaro
1st Edition
1441947205, 978-1441947208
