Question
The Julia-n-Any Co. has expected EBIT of $600 in perpetuity, and unlevered cost of capital of 12%. The firm will raise debt with market value
The Julia-n-Any Co. has expected EBIT of $600 in perpetuity, and unlevered cost of capital of 12%. The firm will raise debt with market value of $1,000 and interest of 8%. The firm will repurchase it equity using the proceeds from newly issued debt. The tax rate is 33% Please, assume the economy with no bankruptcy and no financial distress What is the value of the firm after recapitalization?
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Investments
Authors: Zvi Bodie
12th Edition
1260819426, 9781260819427
