Current value and value of the firm

Assignment Help Financial Management

Reference no: EM131611261

Jet Corporation expects an EBIT of $38,000 every year forever. The company currently has no debt, and its cost of equity is 13 percent. The corporate tax rate is 35 percent.

a. What is the current value of the company? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Current value $

b-1 Suppose the company can borrow at 9 percent. What will the value of the firm be if the company takes on debt equal to 50 percent of its unlevered value? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Value of the firm $

b-2 Suppose the company can borrow at 9 percent. What will the value of the firm be if the company takes on debt equal to 100 percent of its unlevered value? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Value of the firm $

c-1 What will the value of the firm be if the company takes on debt equal to 50 percent of its levered value? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Value of the firm $

c-2 What will the value of the firm be if the company takes on debt equal to 100 percent of its levered value? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Value of the firm $

Reference no: EM131611261

Questions Cloud

Using constant payment loan method : Calculate interest and principle for a $200,000 loan with the rate of 8% that has to be repaid over 8 years using Constant Payment Loan method.

Calculate npv and ror for project : Please calculate NPV and ROR for this project considering the minimum rate of return 10% and 40% income tax.

What is initial investment outlay : Tannen Industries is considering an expansion. What is the initial investment outlay?

Constant amortization loan method : using Constant Amortization Loan method.

Current value and value of the firm : Jet Corporation expects an EBIT of $38,000 every year forever. What is the current value of the company?

What is cost of equity after recapitalization : Meyer & Co. expects its EBIT to be $78,000 every year forever. What is the cost of equity after recapitalization?

Interest rate that makes the sum of the investments : which is an interest rate that makes the sum of the investments and returns on the investment zero at the end of the life of the project.

Calculate risk of six-month call option-risk of call option : Calculate the risk (beta) of a six-month call option with an exercise price of $530. Risk of Call Option:

Purchasing property with an effective gross income : Bruce Wanye is interested in purchasing a property with an effective gross income of $56,321 and a net operating income of $30,481.

User Account

All Pages