Question: #3 (Graded) Saved 25 25 9 points Skipped Print Tempest Corporation expects an EBIT of $57,000 every year forever. The company currently has no debt
#3 (Graded) Saved 25 25 9 points Skipped Print Tempest Corporation expects an EBIT of $57,000 every year forever. The company currently has no debt and its cost of equity is 13 percent. The tax rate is 23 percent. a. What is the current value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-1. Suppose the company can borrow at 10 percent. What will the value of the company be if takes on debt equal to 30 percent of its unlevered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-2. Suppose the company can borrow at 10 percent. What will the value of the company be if takes on debt equal to 100 percent of its unlevered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c-1. What will the value of the company be if takes on debt equal to 30 percent of its levered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c-2. What will the value of the company be if takes on debt equal to 100 percent of its levered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Current value b-1. Value of the company Help Save & Exit Submit Check my work
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
