ignment

i

Byrd Enterprises has no debt. Its current total value is $$50\mathrm{.}2$ million. Assume the company sells $$20$ million in debt.

a$.$ Ignoring taxes and bankruptcy costs, what is the debt$-$equity ratio? Hint: the value of the firm $=$ the value of equity $+$ value of debt. Note: Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

b$.$ Assume the company's tax rate is $21$ percent. What is the debt$-$equity ratio? Ignore bankruptcy costs but assume taxes influence corporate value.

Note: Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

$\backslash$table$[[$a$.$ Debt$-$equity ratio,$],[$b$.$ Debt$-$equity ratio,$]]$