Maddux Corp. has EBIT of $725,000 per year that is expected to continue in perpetuity. The unlevered
Question:
Maddux Corp. has EBIT of $725,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 11 percent and the corporate tax rate is 24 percent. The company also has a perpetual bond issue outstanding with a market value of $1.6 million.
a. What is the value of the company?
b. The CFO of the company informs the company president that the value of the company is $4.9 million. Is the CFO correct?
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a The value of the company EP 72540500 11 24 81 ...View the full answer
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Related Book For 
Corporate Finance
ISBN: 9781260772388
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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