Question
This company can borrow money by selling corporate bonds. If it does so, the interest rate on this debt will be 7 %. Right
This company can borrow money by selling corporate bonds. If it does so, the interest rate on this debt will be 7 %. Right now, though, it does not have any bonds. It is all-equity and the annual cost of equity equals 14 %. . It expects to be receiving $106.000 in annual EBIT forever. Its corporate income is taxed each year at 25 % tax rate. a. The current market value of this company equals: (Do not round your Intermediate calculations. Only round your final answer to 2 decimal places, e.g., 32.16.) b. Next, recalculate the company's current market value if it borrows $210,000 and spends it on buying back its common stock shares. (Do not round your intermediate calculations. Only round your final answer to 2 decimal places, e.g.. 32.16.) a. Value of the firm b. Value of the firm S S 1.514,286.00 1.306,429.00
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
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