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Cavo Corporation expects an EBIT of $19,750 every year forever. The company currently has no debt, and its cost of equity is 15 percent. The corporate tax rate is 35 percent.
1. What is the current value of the company?
2. Suppose the company can borrow at 10%. What will the value of the firm be if the company takes on debt equal to 50% of its unlevered value?
3. Suppose the company can borrow at 10%. What will the value of the firm be if the company takes on debt equal to 100% of its unlevered value?
4. What will the value of the firm be if the company takes on debt equal to 50% of its levered value?
5. What will the value of the firm be if the company takes on debt equal to 100% of its levered value?
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Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.
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the paradise shoes company has estimated its weekly tvc function from data collected over the past several months as
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1. firm a has 10000 in assets entirely financed with equity. firm b also has 10000 in assets but these assets are
What will be the dollar value of the management team's original $2 million equity investment at the time of the liquidity event?
What impact would this change have on the equity value of the business? What if the growth rate were only 2 percent and Is the financial risk of the business different under the two acquisition alternatives?
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