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Your firms's operating costs are given by C=3800+100 Q+5Q^2. The firms total assets are given by TA = 1000+50Q, and the firm is financed 30%
Your firms's operating costs are given by C=3800+100 Q+5Q^2. The firms total assets are given by TA = 1000+50Q, and the firm is financed 30% with debt. The equity investors require a 20% rate of return the cost of debt is 20% and the tax rate is 25%. You have been chosen to produce Q of 20, with a price of 425. At this P and Q combination, what are the value for pie, R, and theta. Pie = economic profit, net income -Ke(NW) and R = net income/stockholders equity. Theta is profitability premium
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