Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Gartner Systems has no debt and an equity cost of capital of 108 Gartners current market ...

Gartner Systems has no debt and an equity cost of capital of 108 Gartners current market capitalization is 97 million and its free cash flows are expected to grow at 29 per year Gartner

Gartner Systems has no debt and an equity cost of capital of 10.8%. Gartner’s current market capitalization is $97 million, and its free cash flows are expected to grow at 2.9% per year. Gartner’s corporate tax rate is 36%. Investors pay tax rates of 38% on interest income and 19% on equity income.
a. Suppose Gartner adds $49 million in permanent debt and uses the proceeds to repurchase shares. What will Gartner’s levered value be in this case?
b. Suppose instead Gartner decides to maintain a 50% debt-to-value ratio going forward. If Gartner’s debt cost of capital is 7.24%, what will Gartner’s levered value be in this case?

Jun 09 2021 View more View Less

Answer (UnSolved)

question Get Solution

Related Questions