Until It Sleeps Corporation expects EBIT of $14,000 every year forever. Until It Sleeps currently has no

Question:

Until It Sleeps Corporation expects EBIT of $14,000 every year forever. Until It Sleeps currently has no debt, and its cost of equity is 16%. The firm can borrow at 9%. If the corporate tax rate is 35%,

A. what is the value of a firm?

B. What will the value be if the company converts to 50% debt?

C. To 100% debt?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...