Kirk Construction has an outstanding debt with a market value of $75,000. The company's Weighted Average...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Kirk Construction has an outstanding debt with a market value of $75,000. The company's Weighted Average Cost of Capital (WACC) is 10%. Its upcoming Earnings Before Interest and Taxes (EBIT) is $10,000 (t=1). The EBIT is expected to grow by 5% per year indefinitely. The tax rate is 20%. What is the equity value of Kirk Construction? $85,000 $155,000 $160,000 $125,000 Kirk Construction has an outstanding debt with a market value of $75,000. The company's Weighted Average Cost of Capital (WACC) is 10%. Its upcoming Earnings Before Interest and Taxes (EBIT) is $10,000 (t=1). The EBIT is expected to grow by 5% per year indefinitely. The tax rate is 20%. What is the equity value of Kirk Construction? $85,000 $155,000 $160,000 $125,000
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
If a particular glucose fermentation process is 87.0% efficient, how many grams of glucose would be required for the production of 51.0 g of ethyl alcohol (C 2 H 5 OH)? C 6 H 12 O 6 2C 2 H 5 OH +...
-
Solve problem 5.1 using source transformation.
-
What is forfaiting? List the parties involved in a forfaiting transaction.
-
Which elements of JL Inc.s business plan reflect a pattern of continuous improvement?
-
The trial balance of Pacilio Security Services Inc. as of January 1, 2013 had the following normal balances: Cash ..............$8,900 Accounts Receivable ......... 1,500 Supplies .............. 65...
-
Alexa owns a condominium near Cocoa Beach in Florida. In 2 0 2 3 , she incurs the following expenses in connection with her condo: \ table [ [ Insurance , $ 2 , 9 0 0
-
Write an essay about choice of benchmark between APOLLO, HupSeng and Nestle Company Malaysia.
-
Discuss the major supply chain APS applications with particular focus on the role and anticipated benefits for each application.
-
How could the relationship between the auditor and management change if conclusive proof emerged that a qualified audit report had adverse implications?
-
Discuss how error accountability can be a major factor in improving forecast performance.
-
How does the "quest for quality" affect logistical operations? Does the concept of total quality have relevancy when applied to logistics?
-
You are the auditor of JHG Ltd, a manufacturing company. This company maintains records of all stock issued and received, valued at standard cost. The computerised accounting system identifies the...
-
Jackson Corporation has expected return of 13% during recession, 10% during normal, and -5% during boom state of economy. Probability of recession, normal and boom states of economy is 0.25, 0.50,...
-
PC Contractors, Inc., was an excavating business in Kansas City, Missouri. Union Bank made loans to PC, subject to a perfected security interest in its equipment and other assets, including...
-
If equity investors contribute $1,000,000 and want a .30 return at time 4, how much do they require at time 4?
-
a. Assume the value of a firm's equity is $1,000 and $800 of .10 debt is substituted for equity. The corporate tax rate is .35. What is the new value of the equity? What total wealth do the...
-
Assume a $800 investment returns $1,000 at time 1 (a .25 return). What is the IRR on $100 of equity if $700 of .08 debt is used as well as equity?
Study smarter with the SolutionInn App