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Home / Questions / Meyer & Co expects its EBIT to be $61000 every year forever The firm can borrow at 7 perce...

Meyer & Co expects its EBIT to be $61000 every year forever The firm can borrow at 7 percent Meyer currently has no debt and its cost of equity is 14 percent

Meyer & Co. expects its EBIT to be $61,000 every year forever. The firm can borrow at 7 percent. Meyer currently has no debt, and its cost of equity is 14 percent.

1) If the tax rate is 35 percent, what is the value of the firm?

The answer is $283,214.29

2) What will the value be if the company borrows $148,000 and uses the proceeds to repurchase shares?

$_______

** I keep getting $235,114.29 which it wrong. Help Please and Thanks!

 

May 31 2020 View more View Less

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