cost of debt 8%     unlevered cost of capital 10%     systematic risk of asset 1.5     1)           Unlevered Firm Levered Firm   EBIT 10000 10000   Interest 0 3200   Taxable Income 10000 6800 34% Tax  3400 2312   Net Income 6600 4488   CFFA 0 -3200         2) PV of the tax shield?               Value of levered firm 3200     tax rate 34%       (value of levered firm*tax rate)/(1+cost of debt)     PV of tax shield 1007.41               value of levered firm/cost of debt   3) Size of debt 40000           4)       a)   EBIT(1-T)/cost of capital     Value of unlevered firm 66000           b)   value of unlevered firm+Tax*size of debt     Value of levered firm 79600           c)   total value of unlevered firm-debt      Equity value 39600   Hi I need help with subparts d,e, and f!  The first three are answered above! Thank you! 4.)Calculate the following values:a) value of unlevered firm; b) value of the levered firm; c) equity value; d) Cost of equity; e) cost of capital; f) systematic risk of the equity

Q: Current Capitalization (Millions of USD) Currency Million USD Shares Price $ 10.7 Shares Outstanding…

A: The main objective of the company would be to maximizing the shareholder's value. That would be…

Q: cost of debt 8%     unlevered cost of capital 10%     systematic risk of asset 1.5     1)…

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: A target firm has the following characteristics: An estimated enterprise value of $100 million…

A: Formula: Equity per common share = Equity value / Number of shares outstanding

Q: Thrice Corp. uses no debt. The weighted average cost of capital is 9.8 percent. The current market…

A: As there is no debt, WACC = Cost of equity (r) = 9.8% Market value of equity = $18.4 million Tax…

Q: Assuming that there is an unlevered firm and a levered firm. The basic information is given by the…

A: Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Return on Capital Employed (ROCE) =   For Riccarton PLC: ROCE = 50000/380000 X 100 = 13.2%…

A: The question is related to Ratio Analysis. The details are given regarding two companies.

Q: Async Inc. and Sync Corp. both have the same EBIT of $5 million and tax rate of 35%. Async is…

A: Value of firm as per M&M proposition is sum of value of unlevered firm and present value of tax…

Q: Rain company whose tax rate is 40% has a total asset of P500,000,000 and earnings before interest…

A: Interest Payment is calculated on the debt part out of the total funds of the company. Net Income is…

Q: Cost of Equity Debt ROC Сapital (4) ($ million) ($ million) (4) Acme 250 125 17 Apex 1,250 417 154…

A: Given information : Acme  Equity = $ 250 million Debt = $125 million  ROC = 17% Cost of capital = 9%…

Q: 3 points Save Answer Goremann Corp (GC) has a total market value of $524 million. The market value…

A: The company is operating activities for the purpose of gain profit. The profit is then distributed…

Q: 33. There are two firms: Firm U and Firm L. Both firms have $100M total assets and $16M EBIT…

A: To find the return on equity, the income is divided by the equity of the firm.

Q: Debt/Assets Equity/Assets Debt/Equity B-T Cost of RRatio (D/E) Dpebt (ka) RRatio (wa) RRatio (w.)…

A: WACC stands for weighted average cost of capital which shows a combination of different source of…

Q: Thrice Corp. uses no debt. The weighted average cost of capital is 4.8 percent. If the current…

A: Earning before interest and taxes are calculated to determine the earnings of the company before…

Q: LMNOP Corporation uses no debt. The weighted average cost of capital is 9.2 percent. If the current…

A: Market Value of equity is calculated by net income with this formula. Value of equity = Net…

Q: A Corporation is planning to loan P20M at an effective interest rate of 10%. The company pays income…

A: Loan amount = P20,000,000 Interest rate = 10% Tax rate = 30%

Q: Cost of equity and Pre-tax cost of debt of Company Z is 15% 9.2% respectively. Company pays tax at…

A: The Weighted average cost of capital(WACC) refers to the method in which each category of capital is…

Q: Market-Value Balance Sheet Net working capital Long-term assets 40 Debt 60 180 Equity 160 $ 220 220…

A: As per MM theory with taxes, the value of the levered firm is equal to value of an unlevered firm…

Q: cost of debt 8%       unlevered cost of capital 10%       systematic risk of asset 1.5…

A: As per our policy, since the question has multiple sub-parts,we will answer first three subpart of…

Q: ou are given the financial information for the Unic Company: Earnings Before Interest and Tax…

A: Company Equity is the difference between the assets and liabilities of the company . We also…

Q: If the value of unlevered company (Vu) is OMR 180,000 and unlevered cost of equity (Ke) is 10%, then…

A: EBIT means earning before interest and taxes. Unlevered firm means a company who do not have any deb…

Q: cost of debt 8%     unlevered cost of capital 10%     systematic risk of asset 1.5     1)…

A: Calculate the cross over rate as follows:

Q: What is the present value of the tax shield? Assume that cost of debt = 8%; unlevered cost of…

A: Calculation of Present Value of Tax Shield:The present value of the tax shield is 1,007.41.Excel…

Q: cost of debt 8%     unlevered cost of capital 10%     systematic risk of asset 1.5     1)…

A: 4)d) Cost of equity is calculated after adjusting the unlevered cost of equity with the debt…

Q: cost of debt 8%     unlevered cost of capital 10%     systematic risk of asset 1.5     1)…

A: Systematic risk of the equity is calculated using the unlevered systematic risk and debt equity…

Q: I need help with the last two subsets (d and e). I have created a chart for the EBIT-EPS…

A: d) In a high EBIT growth scenario, structure B with high leverage is more favorable in terms of…

Q: Assuming that there is an unlevered firm and a levered firm. The basic information is given by the…

A: The required values are mentioned in below table:

Q: If the company’s Earnings before interest and taxes (EBIT) is OMR 500,000, the weighted average cost…

A: Market value of firm under net income approach  = EBIT /Cost of capital SO, EBIT  = Market value *…

Q: Alhamra Technology's capital structure is as follows (in %): Debt 30; Preferred stock 20; Common…

A: A company has several sources from where it can raise funds. It can issue equity shares and the…

Q: cost of debt 8%     unlevered cost of capital 10%     systematic risk of asset 1.5     1)…

A: 5. The conceptual formula used:

Q: perties Berhad uses the following four sources of capital in their company's operations; No…

A: Weighted average cost of capital can be calculated from different weighted cost of capital of each…

Q: Xena Corp. Total Assets $21,249 Interest-Bearing Debt (market value) $11,070 Average borrowing rate…

A: Weighted Average Cost of Capital refers to the financial ratio that calculates the overall cost of…

Q: Can you explain the information below market value added (MVA) analysis and interpretation of…

A: MVA means net increase in the value of the firm. It mainly depends upon the share price because the…

Q: Annual after-tax cost of debt=10% and tax rate=30%. Risk-free rate=5% and market risk premium=8%.…

A: The Weighted Average cost of capital is the overall cost of the company in raising the capital. It…

Q: debt and RM30,000 common stock. The before-tax cost of debt is 9% and nmon stock is 14%. If the…

A: WACC = E/D+E * (re) + D/D+E*(rd)*(1-t) where E = equity amount  D = debt amount re = cost of equity…

Q: What is the cost of equity for the unleverd and levered firms? Given: Tax shield = 1,007.41 Size of…

A: Unlevered cost of equity is refers to the required rate of return that an unlevered organization…