Value of the company before and after tax

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Tah Hoo Tang Bhd. has Earnings Before Interest and Tax (EBIT) RM4,000 with 20,000 shares outstanding and 15 percent return on equity. The company decided to issue RM8,800 worth of bond at 10 percent interest . The marginal tax rate of 34 percent.

Calculate:

i. Value of the company before and after tax.

ii. Value of equity after the bond issued.

iii. Weighted Average Cost of Capital (WACC

Reference no: EM132602457

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