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Yellow Elm Education Technology currently has bonds outstanding with a total face value of $3.633 billion on which the firm pays coupons in perpetuity at
Yellow Elm Education Technology currently has bonds outstanding with a total face value of $3.633 billion on which the firm pays coupons in perpetuity at a rate of 6.85% per annum. The firm pays also corporate tax at a marginal rate of 35.0% and the risk-free rate is currently 6.01% per annum. Aside from the presence of corporate taxes, assume that Yellow Elm Educational Technologies exists in a world where there are no other capital market imperfections (such as agency costs, the costs of financial distress, etc.). A) Assume that the risk of the interest tax shields is the same as the risk of the debt itself. Calculate the present value of the interest tax shields resulting from YEET's current level of debt financing. The Present Value of the Interest Tax Shields is $ million (Round your answer to 2 decimal places) Assume that YEET also has 520.0 million shares of ordinary equity outstanding that currently trade at a price of $2.40 each B) Given the above information, what would be the percentage weight of debt (i.e. WD) in their capital structure that YEET would use in the calculation of their weighted average cost of capital (i.e. RWACC)?? The firm is financed by % debt. (Round your answer to 2 decimal places) Yellow Elm Education Technology currently has bonds outstanding with a total face value of $3.633 billion on which the firm pays coupons in perpetuity at a rate of 6.85% per annum. The firm pays also corporate tax at a marginal rate of 35.0% and the risk-free rate is currently 6.01% per annum. Aside from the presence of corporate taxes, assume that Yellow Elm Educational Technologies exists in a world where there are no other capital market imperfections (such as agency costs, the costs of financial distress, etc.). A) Assume that the risk of the interest tax shields is the same as the risk of the debt itself. Calculate the present value of the interest tax shields resulting from YEET's current level of debt financing. The Present Value of the Interest Tax Shields is $ million (Round your answer to 2 decimal places) Assume that YEET also has 520.0 million shares of ordinary equity outstanding that currently trade at a price of $2.40 each B) Given the above information, what would be the percentage weight of debt (i.e. WD) in their capital structure that YEET would use in the calculation of their weighted average cost of capital (i.e. RWACC)?? The firm is financed by % debt. (Round your answer to 2 decimal places)
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