Calculate the value of the firm and the wacc ) of the firm

Assignment Help Financial Management

Reference no: EM131966088

Value of Debt	R₀	Beta
0	4.0%	1.428571
250,000	4.0%	1.483015
500,000	4.5%	1.542274
750,000	5.0%	1.607016
1,000,000	7.0%	1.678038
1,250,000	9.0%	1.756303
1,500,000	11.0%	1.842075
1,750,000	13.0%	1.939488
2,000,000	15.0%	2.047619
2,250,000	17.0%	2.169599

EBIT           800,000
Tax Rate     40%
T-bill Rate   3.0%
TSX           10.0%

1. What are the key factors that you need to identify to indicate the world or case that you are using to evaluate the value of the above information and which world or case you are using?

2. Using the information from the table, calculate the value of the firm (a proposition I) and the WACC (proposition II) of the firm if the firm issues $750,000 of debt. Show all of your work!

3. Using the information from the table, calculate the value of the firm (a proposition I) and the WACC (proposition II) of the firm if the firm issues $1,000,000 of debt. Show all of your work!

4. Using the information from the table, calculate the value of the firm (a proposition I) and the WACC (proposition II) of the firm if the firm issues $2, 250,000 of debt. Show all of your work!

Reference no: EM131966088

Questions Cloud

What is the present value of annual cash flow : What is the present value of the annual cash flow that is expected in 3 years from today?

Write about multicultural : You need to write 200 words on Multicultural.

Makes his first regular annual payment : He makes his first regular annual payment in 1 year, then what is X, Jens’s regular annual payment?

What was delta payout ratio for fiscal year : Delta Corporation earned $3.50 per share during fiscal year 2009 and paid dividends of $0.70 per share. During the fiscal year that just ended on December 31.

Calculate the value of the firm and the wacc ) of the firm : What are the key factors that you need to identify to indicate the world or case that you are using to evaluate the value of the above information.

What is the value of the vending machine : The cost of capital for the vending machine is 8.64 percent. What is the value of the vending machine?

What is the value today of receiving a single payment : What is the value today of receiving a single payment of $44551 in 21 years if your required rate of return on this investment is 12.3% compounded semi-annually

Investment worth-amount of the special payment : Sasha has an investment worth 8,640 dollars. What is X, the amount of the special payment that will be made to Sasha in 6 years?

Describe how positive behaviors should be supported : Describe how positive behaviors should be supported, and incorporate specific tools to reverse or minimize leadership behaviors that are viewed.

User Account

All Pages