Question: B&H Co. expects its EBIT to be $50,000 every year forever. The firm can borrow at 6% interest rate B&H currently has no debt,

B&H Co. expects its EBIT to be $50,000 every year forever. The firm can borrow at 6% interest rate B&H currently has no debt, and its cost of equity is 8%. The tax rate is 0%. Required 1.What is the value of B&H? 2.Determine the cost of equity when management decides to transform 40% of equity into debt. 3.Explain the adjustment of the cost of equity Now assume that B&H operates in a world with corporate taxes (20%) Required 1. Determine value of the company (100% equity) 2.Determine the value of the company after refinancing with 2 mln debt. Debt will be used to repurchase shares. 3.Determine the cost of equity when management decides to transform 40% of equity into debt. 4.Calculate the wacc after refinancing

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