Question: 23. Happy & Fun Inc. expects its EBIT to be $45,000 every year forever. Happy & Fun is currently an all-equity firm and has no

23. Happy & Fun Inc. expects its EBIT to be $45,000 every year forever. Happy & Fun is currently an all-equity firm and has no debt. Its cost of equity is 20 percent. The tax rate is 34 percent. The company can borrow at 9 percent. What is Happy & Fun's (unlevered) value currently? A. $45,000 B. $148,500 C. $225,000 D. $330,000 E. None of the above 24. Using information from the above for Happy & Fun Inc.. If Happy & Fun decides to increase its debt-equity ratio (D/E) to 0.5. what is the weighted average cost of capital (WACC) of Happy & Fun Inc. after taking on the leverage? A. 14.79 percent B. 15.31 percent C. 17.73 percent D. 18.75 percent E. None of the above

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