What is the value of the company

Assignment Help Finance Basics

Reference no: EM131461935

Question: Janetta Corp. has an EBIT rate of $975,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 14 percent and the corporate tax rate is 35 percent. The company has a perpetual bond issue outstanding with a market value of $1.9 million. What is the value of the company? If the CFO of the company informs the company president that value of the company is $4.8 million. Would the CFO be correct? Explain.

Reference no: EM131461935

Questions Cloud

Calculate enthalpy change for reaction : Ethane burns in oxygen to produce carbon dioxide and water. Balance the equation and calculate enthalpy change (DH) for the reaction

Calculate after-tax cash flow at disposal : This asset qualifies as a seven-year recovery asset under MACRS. Calculate After-Tax Cash Flow at disposal

What are the cost savings when a company outsources : What are the Cost Savings when a company outsources? Establish the preliminary performance targets of service that will be required from the selected vendors.

What is the percentage increase in ebit : Warren's Hats forecasts that it will sell 25,000 baseball caps next year. The company buys its caps for $3 from the wholesaler and sells them for $15 each.

What is the value of the company : Janetta Corp. has an EBIT rate of $975,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 14 percent.

Explain how these characteristics were developed : Using your life experiences, explain how these characteristics were developed

Write two research report one about learning : Write Two Research Report one about Learning and the other on about Behavior

What is jakes weighted average cost of capital : Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Jake's paid an annual dividend in the amount.

Should it be consumers'' choice to partake in products : Should it be consumers' choice to partake in products that are not healthy for them, or do those companies have an ethical obligation to protect people?

User Account

All Pages