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TEST NO.3 PAGE 13 4. (8 points) Currently Travel World has an EBIT of $15M, a corporate tax rate (Te) equal to 30%, and the
TEST NO.3 PAGE 13 4. (8 points) Currently Travel World has an EBIT of $15M, a corporate tax rate (Te) equal to 30%, and the following capital structure Debt 15 million Equity ? million What should the value of the firm equal if M&M '58 (without taxes) theory is correct? -10% ku-15% What does ki equal? What should the value of a firm equal if M&M *63 (with taxes) theory is correct? Given taxes, what does the WACC equal? (5 points) What should the value of the firm equal of the Miller 77 theory is correct? Assume that Tpd - 2016. Tps - 28% T-30%
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