Bloom Company Limited expects its EBIT to be $100,000 every year forever. The firm can borrow at 9 percent. The firm currently has no debt, and its cost of equity is 18 percent. The tax rate is 35 percent. The firm will borrow $80,000 and use the proceeds to repurchase shares. What will the WACC be after recapitalization?

Q: . If the tax rate is 25 percent, what is the value of the firm? (Do not round intermediate…

A: Firm Value: It represents the sum of all the creditor's claims & shareholders. It can be…

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A: Value of the unlevered firm is calculated as below:Answer: Value is $520000.00

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Q: Calvert Corporation expects an EBIT of $25,500 every year forever. The company currently has no…

A: Given information, EBIT = $25,500 Cost of Equity = 15.4% Borrow rate = 10.2% Tax rate =21%

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A:

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Q: uttercup Company Limited expects its EBIT to be $100,000 every year forever. The firm can borrow at…

A: In this we have to determine WACC after recapitalization that repurchase of shares.

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A: Given that;The amount of funds raised is $54 millionExpected stock price is $12Amount of fees…

Q: Rose Company Limited expects its EBIT to be $100,000 every year forever. The firm can borrow at 9…

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Q: Meyer & Co. expects its EBIT to be $97,000 every year forever. The firm can borrow at 8 percent. The…

A:

Q: Gypco expects an EBIT of $10,000 every year forever. Gypco can borrow at 7 percent. Suppose Gypco…

A: Gyco's EBIT = $10000 Tax rate =35% Debt =15000 Cost of Equity =17%

Q: ABC is an unlevered firm with EBIT of $12,000 per year forever. Its unlevered cost of equity is 12%.…

A: Value of Unlevered Firm = EBIT of Unlevered Firm * (1-tax rate) / Unlevered Cost of Equity = 12,000…

Q: nflower Company Limited expects its EBIT to be $100,000 every year forever. The firm can borrow at 9…

A: WACC is the average cost cost of capital. Ir can be calculated WACC =weight of equity*cost of…

Q: Meyer & Co. expects its EBIT to be $97,000 every year forever. The firm can borrow at 8 percent. The…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: IntFin Inc. has two investment opportunities that will pay each 10 per year for the upcoming 10…

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: The Podrasky Corporation is considering a $250 million expansion (capital expenditure) program next…

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Q: KN&J expects its EBIT to be $147,000 every year forever. The company currently has no debt but can…

A: Given data; EBIT = $147,000 cost of equity = 14.6% tax rate = 21% debt value = $40,000

Q: National Corporation expects to generate free-cash flows of P300,000 per year for the next five…

A: Answer -   Free cash flow From Year 1 to 5 = $300000   Step 1 : Calculation of Cashflow of 6th Year…

Q: Wil Technologies is expected to generate $150 million in free cash flow next year, and FCF is…

A: As there is no equity or debt value of equity is = value of firm/shares outstanding

Q: Persian Rugs needs $600 million to support growth next year. If it issues new common stock to raise…

A: Solution: Funds raised after flotation cost : 600 /(1-.04)= 600/.96 = $ 625 million Number of shares…

Q: hange Corporation expects an EBIT of $33,000 every year forever. The company currently has no debt,…

A: EBIT = $33000 Tax rate (T) = 23% Cost of equity (r) = 11%

Q: Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of…

A: The financing requirement is the total funds or capital required by the company.

Q: What will the WACC be after recapitalization?

A: WACC: It is the weighted average cost of capital of the corporation for raising various sources of…

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A: Therefore, the NPV is $85.06 million.

Q: Meyer & Co. expects its EBIT to be $78,000 every year forever. The firm can borrow at 7 percent.…

A: Value of firm = EBIT / Cost of capital

Q: Meyer & Co. expects its EBIT to be $97,000 every year forever. The firm can borrow at 8 percent. The…

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Q: Bruce & Co. expects its EBIT to be $185,000 every year forever. The firm can borrow at 9 percent.…

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Q: Meyer & Co. expects its EBIT to be $78,000 every year forever. The firm can borrow at 7 percent.…

A: given information  EBIT = 78,000 cost of equity = 12% tax rate = 35%

Q: Consider the same two firms U and L - that are identical except for capital structure. Each firm…

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A: Free cash flow next year = 175 million Growth rate = 7% WACC=10% Share outstanding = 45million

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