SoonerCo has $15 million of common stock outstanding, earnings before interest and taxes (EBIT) of $2.5 million per year, and $15 million of debt outstanding with a required return (interest rate) of 8%. The required rate of return on assets in this industry is 12%, and the corporate tax rate is 35%. Within the M&M framework of corporate taxes but no personal taxes, determine the present value of the interest tax shield of SoonerCo as well as the firm’s total value. Finally, determine the gain from leverage if there are personal tax rate of 15% on stock income and 25% on debt income.
Answer to relevant QuestionsCompose a set of instructions on how to prepare and deliver an oral presentation. The instructions that you write for this assignment should be for a presentation to be delivered to a live audience. When the MNC develops an economic exposure strategy, the ___ the price elasticity of demand, the ___ the incentive to hold down price and thereby expand sales.a) Lower, greaterb) Greater, lowerc) Greater, greaterd) ...If a fixed input price decrease, what happens in the short run and the long run price of fixed input decreases?1. Who was Salvador Allende? 2. How did the Peruvian military dictatorship differ from others in South America?Download one mortgage and one deed of trust from the Freddie Mac website. Compare them to see what differences you can find in their clauses
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