Question
The current market value of Mathers Manufacturing Limited is $20,500,000. The company hasno debt. (Assume there is no cost of financial distress and general M&M
The current market value of Mathers Manufacturing Limited is $20,500,000. The company hasno debt. (Assume there is no cost of financial distress and general M&M assumptions apply)
a) If there are no taxes and the EBIT is $3 million, what is the cost of equity? What is theWACC?
b) If the tax rate is 40%, what is the EBIT if the unlevered cost of equity is 14.63%? What is the WACC?
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a Since there is no debt fund and no tax Cost of equity EBITMarket value of sh...
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Introduction to Finance Markets Investments and Financial Management
Authors: Melicher Ronald, Norton Edgar
15th edition
9781118800720, 1118492676, 1118800729, 978-1118492673
