What will the value of firm be if company takes on debt

Assignment Help Financial Management

Reference no: EM131586659

Calvert Corporation expects an EBIT of $21,750 every year forever. The company currently has no debt, and its cost of equity is 15.0 percent. The company can borrow at 9 percent and the corporate tax rate is 38.

a. What is the current value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Value of the firm $

b. What will the value of the firm be if the company takes on debt equal to 40 percent of its unlevered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Value of the firm $

What will the value of the firm be if the company takes on debt equal to 100 percent of its unlevered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Value of the firm $

c. What will the value of the firm be if the company takes on debt equal to 40 percent of its levered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Value of the firm $

What will the value of the firm be if the company takes on debt equal to 100 percent of its levered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Value of the firm $

Reference no: EM131586659

Questions Cloud

Calculate net present value of this investment opportunity : Winthrop Company has an opportunity to manufacture and sell a new product for a five-year period. Calculate the net present value of this investment opportunity

Prepare the adjusting journal entry on december : Prepare the adjusting journal entry on December 31. In separate T-accounts for each account, enter the unadjusted balances

How does level of education affect income : Conduct some internet research. How does level of education affect income?

Find the correct amount of revenue : Analyse the given examples to as certain the correct amount of revenue realised for the year ending 31st December 2016: 1)N.P received an order to supply gold.

What will the value of firm be if company takes on debt : What is the current value of the company? What will the value of the firm be if the company takes on debt equal to 40 percent of its levered value?

Capital expenditures are part of cash flow from operations : Capital Expenditures are part of Cash Flow from Operations. Depreciation is considered a source of funds and is part of Cash Flow from Operations.

Describe how the firm executes on its pricing strategy : Learn to think broadly on the issues we studied- theimportance of rationality in decision making and the impact of human behaviorin limiting rational decision.

Describe the hr job positions : Propose how you would ensure the HR strategy is in alignment with the business strategy

Native americans- mexican tejanos : State how identities are fluid in an area with no long standing political sovereignty powerful enough to FORCE identity and allegiance.

User Account

All Pages