What is the current value of the company

Assignment Help Finance Basics

Reference no: EM13299325

Young Corporation expects an EBIT of $ 16,000 every year forever. The company currently has no debt, and its cost of equity is 15 percent.
a. What is the current value of the company?
b. Suppose the company can borrow at 10 percent. If the corporate tax rate is 35 percent, what will the value of the firm be if the company takes on debt equal to 50 percent of its unlevered value? What if it takes on debt equal to 100 percent of its unlevered value?
c. What will the value of the firm be if the company takes on debt equal to 50 percent of its levered value? What if the company takes on debt equal to 100 percent of its levered value?

Reference no: EM13299325

Questions Cloud

By what factor has the mass of the electron increased : An electron is accelerated through a potential difference of 10 Megavolts. By what factor has the mass of the electron increased

Explain acetic acid/acetate buffer solutions a and b : Acetic acid has a Ka of 1.8 times 10^{-5}. Three acetic acid/acetate buffer solutions, A, B, and C, were made using varying concentrations: 1. [acetic~acid] ten times greater than \rm [acetate]

Calculate average f per m using an mlss of 1000 mg per l : Wastewater flow is 80 gpcd with 170 mg/l BOD and 190 mg/l suspended solids. Size the extended aeration basin and clarifier using the minimum detention time and overflow rates. Calculate the average F/M using an MLSS of 1000 mg/l.

What is the radius of the widest circular orbit : Stellar radial velocity variations as small as 1 m/s can be detected with current technology. what is the radius of the widest circular orbit on which jupiter could currently be detected orbiting the Sun

What is the current value of the company : Young Corporation expects an EBIT of $ 16,000 every year forever. The company currently has no debt, and its cost of equity is 15 percent.

Explain the reducing agent and what has been reduced : What is the reducing agent and what has been reduced c. What quantity of iodine can be obtained if 20.0g of NaI is mixed with 10.0g of MnO2 ( and a stoichiometric excess of sulfuric acid)

Determine liquid detention time-loading rate and fm ration : Determine the liquid detention time, loading rate, F/M ration (with an MLSS of 2350 mg/l), sludge age (with 5330 lb/day waste sludge Eff. SS= 20 mg/l. Will the sludge settle properly

Find the actual profit : James Company has a margin of safety percentage of 20% based on its actual sales. The break-even point is $200,000 and the variable expenses are 45% sales.

What will knox corp.s net income be for 2011 : Depreciation expense will be $2,500, interest expense $1,500, and other expenses will be $3,000. Wessel's tax rate is 35%. What will Knox Corp.'s net income be for 2011?

User Account

All Pages