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This is an M&M world with corporate taxes. Sci-fi is financed with $100,000,000 in debt at 6% and has a stock price of $42 per

This is an M&M world with corporate taxes. Sci-fi is financed with $100,000,000 in debt at 6% and has a stock price of $42 per share. All earnings are paid out as dividends, and the growth rate is zero. The firm decides to issue more stock and use the proceeds to repay all debt. The capital structure change is permanent (so they will be entirely unlevered). Fill in all of the missing information in the table below.

Unlevered

Levered

EBIT

80,000,000

80,000,000

INTEREST

EBT

Taxes (40%)

Net Income

#Shares

10,000,000

EPS

Unlevered return

10%

10%

Return on Equity rS

Price

Firm Value (V)

WACC

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