An un-levered firm, The Jedi Knights Company Ltd. has an EBIT of $450,000 that it expects it
Fantastic news! We've Found the answer you've been seeking!
Question:
An un-levered firm, The Jedi Knights Company Ltd. has an EBIT of $450,000 that it expects it will earn forever and it pays all of its earnings as dividends to shareholders (ie. no growth). The Jedi Knights Company Ltd. has 287,234 shares issued and outstanding.
Now assume a world of taxes, a cost for the risk of default.
1. What is the value of this all equity firm and what is the WACC for the company if the tax rate is 40% and the company's beta is 0.90?
2. What is the value of the firm if the firm issues $100,000 of 6% bonds and what is the WACC for the firm? Additional information is included in the schedule below.
Related Book For
Posted Date: