Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

XY Company has the following Data for the current year-------------- Earning before interest and taxes (EBIT) = $40,000, Tax Rate (T) 20%. Fair Value of

XY Company has the following Data for the current year-------------- Earning before interest and taxes (EBIT) = $40,000, Tax Rate (T) 20%. Fair Value of long term debt (D)$600,000, rd 8%, rs 10%. Number of outstanding (n) 6,000, Stock price (P0) 12, Assume that: 1) the market value of share (S) is stable. 2) all earnings are paid as dividends, 3) the long term debt is perpetual. S=P0n=$? V= D+S=$? D/V= ? S/V=?% WACC=?%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Dark Side Of Valuation

Authors: Aswath Damodaran

2nd Edition

0137126891, 9780137126897

More Books

Students also viewed these Finance questions