MM with taxes Sunshine Trading Company (STC) has an expected EBIT of $20,000 in perpetuity, and a
Fantastic news! We've Found the answer you've been seeking!
Question:
MM with taxes Sunshine Trading Company (STC) has an expected EBIT of $20,000 in perpetuity, and a tax rate of 40%. The interest rate on STC’s debt is 8%. The debt-equity ratio of STC is 0.6, or 3/5. Blackstone Inc (BI) is an all-equity firm, which is identical to STC, except for the capital structure. The rate of return on BI’s equity is 11.7647%.
What is the value of BI? Round to the nearest whole number.
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date: