Uses proceeds to repurchase shares

Assignment Help Financial Management

Reference no: EM131923840

Cede & Co. expects its EBIT to be $91,000 every year forever. The firm can borrow at 4 percent. Cede currently has no debt, and its cost of equity is 11 percent. If the tax rate is 35 percent, what is the value of the firm? (Do not round intermediate calculations and round your answer to 2 decimal places (e.g., 32.16).) What will the value be if the company borrows $136,000 and uses the proceeds to repurchase shares? (Do not round intermediate calculations and round your answer to 2 decimal places (e.g., 32.16).)

Reference no: EM131923840

Questions Cloud

Eligibility for subsidized stafford loan : Eligibility for a subsidized Stafford loan is based on current financial need.

What would be the level of inflation : what would happen to nominal GDP? If real GDP rose 2 percent, what would be the level of inflation?

What is the value of conversion option implied : Assuming that this advice is correct, what is the value of the conversion option implied?

Real yield on non-money assets and real yield on money : Money demand depends in part on its opportunity cost, the difference between the real yield on non-money assets and the real yield on money.

Uses proceeds to repurchase shares : What will the value be if the company borrows $136,000 and uses the proceeds to repurchase shares?

Compute the cost of the merchandise which management : Compute the cost of the merchandise which management should expect to purchase during 2015.

Proceeds with the recapitalization : What will be the company’s earnings per share, if it proceeds with the recapitalization?

Relationship between the real interest rate and investment : Given the expected relationship between the real interest rate and investment,

What is the long-run real interest rate : You check the website of the Congressional Budget Office and learn that the level of potential output is 2,760. What is the long-run real interest rate?

User Account

All Pages