Question
The current market value of Mathers Manufacturing Limited is $20,500,000.The company has no debt.(Assume there is no cost of financial distress and general M&M assumptions
The current market value of Mathers Manufacturing Limited is $20,500,000.The company has no 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 the WACC? (3 marks)
b)If the tax rate is 40%, what is the EBIT if the unlevered cost of equity is 14.63%? What is the WACC? (3 marks)
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Matlab An Introduction with Applications
Authors: Amos Gilat
5th edition
1118629868, 978-1118801802, 1118801806, 978-1118629864
