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Short-site.Com earned after-tax cash flows of $10,000,000 last year, and expects the cash flows to continue to infinity. The company has no debt, and its cost of equity is 12%. The corporate tax rate is 40%. Suppose the firm decides to change its capital structure by borrowing at 8% interest. The new debt-to-equity ratio will be 1. Assume that we live in an MM world with taxes, and that the new level of debt will not increase the probability of default significantly.
a) What is the cost of equity after the restructuring?
b) What is WACC after the restructuring?
c) What is the value of the firm before and after the restructuring? Are they the same or different, and why?
d) What other factors that are not considered under the current MM assumption would you recommend that the firm consider before they do the restructuring?
1. suppose your companys method of making decisions under risk is making the best out of the worst possible outcome.
It also requires a relatively large lab for conducting tests of various types (e.g., MRIs, blood tests, and ultrasound tests). Do you think that Boswell is more likely to outsource its janitorial services or lab work? Explain.
Need help with a paper that uses the material in Managerial Economics to analyze, compare, and contrast some of the most popular online auction sites.
In other words, what are the conditions that promote democracy generally and how does India match up to these conditions? Be as specific by providing facts and examples.
Assess the current environmental scan factors that are relevant to the decision making process. Determine the factors that will have the greatest impact on pl
Compute the order quantity and reorder point - How many kanbans are needed? Please provide at least one step of calculation and the correct answer for full credit.
1. What is the relationship between the mpc, the mpc and the mpw?
Which of the following will have positive signs and which will have negative ones:
Discuss the trade-offs between sample size (7 teens), cost, and reliability of what is learned from this experiment. An agent accompanied the teens while they were shopping.
Let the production function be given through, Assume the plant size (K) is fixed in the short run at 100.
A reserve value is a minimum value set by the auctioneer. If no bidder is willing to pay the reserve price, the item is unsold at a profit of $0 for the auctioneer.
They argue that free trade will increase total world output and make people of trading nations better off. Discuss how this argument relates to concepts presented in the chapter.
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