3. (20 points) Streiber Publishing Company, an all-equity firm, generates perpetual earnings before interest and taxes...

   

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3. (20 points) Streiber Publishing Company, an all-equity firm, generates perpetual earnings before interest and taxes of $2.5 million per year. It's after-tax, all-equity discount rate is 20%. The company's tax rate is 34%. a. What is the value of Streiber Publishing? b. If it adjusts its capital structure to include $600,000 of debt, what is the value of the firm? c. Explain any difference in your answers. d. What assumptions are you making when you are valuing Streiber? 3. (20 points) Streiber Publishing Company, an all-equity firm, generates perpetual earnings before interest and taxes of $2.5 million per year. It's after-tax, all-equity discount rate is 20%. The company's tax rate is 34%. a. What is the value of Streiber Publishing? b. If it adjusts its capital structure to include $600,000 of debt, what is the value of the firm? c. Explain any difference in your answers. d. What assumptions are you making when you are valuing Streiber?