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Snow Games has 20,000 shares outstanding, a market price of $20 per share, and a cost of equity of 15.00%. It can borrow at a pretax rate of 9.00%, but currently has no debt. It wants to restructure itself by selling shares to buy $100,000 in debt. It s tax rate is 40%.
A. What is the firm's current market value?
B. What is the firm's market value after adding the $100,000 in debt?
C. What is the firm's cost of equity after adding debt?
D. What is the firm's WACC after adding debt?
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Tibbs Corporation has the following information for the current year: Net income = $300; Net operating profit after taxes (NOPAT) = $400; Total assets = $2,900; Short-term investments = $200;
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