Edward Corporation expects to earn $ 4 0 , 0 0 0 in EBIT every year forever.
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Question:
Edward Corporation expects to earn $ in EBIT every year forever. The company currently has no debt and its cost of equity is percent. The tax rate is percent. The company can borrow at percent. The CFO of the company decides to change the company's
capital structure by taking on $X debt forever. And the borrowed money will be used to buy back $X worth of equity. If Edward is worth $ after the capital restructuring, what is the value of X
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