Question: please answer the this carefully the other solutions werent informative Pari Inc., an all - equity firm, has earnings before interest and taxes of $
please answer the this carefully the other solutions werent informative
Pari Inc., an allequity firm, has earnings before interest and taxes of $ and an unlevered beta of The firm has common shares issued and outstanding. In the market, you observe that Government Tbills are being sold to yield and the S&PTSX Composite Index is expected to yield Assume M&M case I, with no taxes and no cost for the risk of default. All general M&M assumptions apply.
a What is the market value of the firm? marks
b What is the WACC for the firm. mark
c What is the market value of a share in the company and what is the EPS? marks
d What is the market value of the firm and the market value of the equity if they issue $ in debt with a coupon rate of and use the proceeds to repurchase shares? marks
e What is the new cost of equity? marks
f According to CAPM, what is the new beta? marks
g What is the WACC? marks
h Explain what happens to the market value of the firm and the WACC if the firm increases itsdebttoequity ratio. mark
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