Fin 3403 – Meyer & Co. Expects Its Ebit To Be $66,000 Every Year Forever.

Meyer & Co. expects its EBIT to be $66,000 every year forever. The firm can borrow at 8 percent. Meyer currently has no debt, and its cost of equity is 14 percent. If the tax rate is 35 percent, what is the value of the firm? Note: Use the M&M proposition I formula with taxes but without any debt. (Do not round intermediate calculations. Round your answer to 2 decimal places, e. g. , 32. 16. )What will the value be if the company borrows $140,000 and uses the proceeds to repurchase shares? Note: Use the M&M proposition I formula with taxes and with debt. (Do not round intermediate calculations. Round your answer to 2 decimal places, e. g. , 32. 16. )

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