The current market value of Mathers Manufacturing Limited is $20,500,000. The company hasno debt. (Assume there is

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The current market value of Mathers Manufacturing Limited is $20,500,000. The company hasno debt. (Assume there is no cost of financial distress and general M&M assumptions apply)

a) If there are no taxes and the EBIT is $3 million, what is the cost of equity? What is theWACC?

b) If the tax rate is 40%, what is the EBIT if the unlevered cost of equity is 14.63%? What is the WACC?

Related Book For answer-question

Introduction to Finance Markets Investments and Financial Management

ISBN: 978-1118492673

15th edition

Authors: Melicher Ronald, Norton Edgar

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Posted Date: May 03, 2023 05:47 AM

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The current market value of Mathers Manufacturing Limited is $20,500,000. The company hasno debt. (Assume there is

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a Since there is no debt fund and no tax Cost of equity EBITMarket value of sh... View the full answer

Introduction to Finance Markets Investments and Financial Management

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