Until It Sleeps Corporation expects an EBIT of $14,000 every year forever Until It Sleeps currently has no debt, and its cost of equity is 16 percent The firm can borrow at 9 percent If the corporate tax rate is 35 percent, what is the value of the firm What will the value be if the company convert...

After tax cash flow to the firm EBIT 1 tax rate 14000 1 035 9100 W ...

Until It Sleeps Corporation expects an EBIT of $14,000 every year forever. Until It Sleeps currently has

Question:

Until It Sleeps expects an EBIT of $14,000 every year forever. Until It Sleeps currently has no debt, and its is 16 percent. The firm can borrow at 9 percent. If the corporate tax rate is 35 percent, what is the value of the firm? What will the value be if the company converts to 50 percent debt? To 100 percent debt?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...