What is gomezs value of equity

Assignment Help Accounting Basics

Reference no: EM13122591

Gomez computer systems has EBIT of $200,000, a growth rate of 6 percent, and faces a tax rate of 40 percent. In order to support growth, Gomez must reinvest 20 percent of its EBIT in net operating assets. Gomez has $300,000 in 8 percent debt outstanding, and a similar company with no debt has a cost of equity of 11 percent. According to the Miller model, what is Gomez's value of equity?

Reference no: EM13122591

Questions Cloud

Explain how a sale would be generally treated : If economic depreciation refers to diminution in value because of obsolescence, physical wear and tear, technological advances in substitute goods, or changes in consumption behavior.

Determining continuity of a graph : Determine if the given function can be extended to a continuous function at x=0. If so, approximate the extended function's value at x=0 (rounded to four decimal places if necessary).

Determining limit of a function : Given lim as x approaches 0- f(x) = Ll , lim as x approaches 0+ f(x) = Lr , and Ll ≠ Lr, which of the following statements is true?

Identify optimal production level : How do I determine the short-run profit maximizing price and quantity? How do I determine the maximum profit accruable to the firm?

What is gomezs value of equity : Gomez has $300,000 in 8 percent debt outstanding, and a similar company with no debt has a cost of equity of 11 percent. According to the Miller model, what is Gomez's value of equity?

What the ratios or numbers mean : This assignment assumes you are a consultant and provide your findings to your client. Please make sure the memo is clear, brief and understandable. Also attach the appropriate information and calculation in the appendix for the clients to underst..

Describe each of the generally accepted auditing standards : Briefly describe each of the generally accepted auditing standards and indicate how the action(s) of Jones resulted in a failure to comply with each standard. Use the table below to present your answers.

How to prepare a cash budget for october and november : Fabrice Corp. requires a minimum $6,200 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly).

How should clyde treat the payment : Clyde agreed to surrender his Red stock in exchange for $600,000. clyde's basis in his shares was $143,000 and he held the shares for 17 years. the agreement made no explicit allocation of any of the $600,000 to clyde's agreement not to compete ag..

User Account

All Pages