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Janetta, Corp. has an EBIT of $1,015,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 16 percent, and the corporate tax rate is 35 percent. The company also has a perpetual bond issue outstanding with a market value of $2 million. What is the value of the company? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of the company

Janetta, Corp. has an EBIT of $1,015,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 16 percent, and the corporate tax rate is 35 percent. The company also has a perpetual bond issue outstanding with a market value of $2 million. What is the value of the company? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of the company

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 17P
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Janetta Corp. has an EBIT of $1,015,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 16 percent, and the corporate tax rate is 35 percent. The company also has a perpetual bond issue outstanding with a market value of $2 million. What is the value of the company? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of the company
Transcribed Image Text:Janetta Corp. has an EBIT of $1,015,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 16 percent, and the corporate tax rate is 35 percent. The company also has a perpetual bond issue outstanding with a market value of $2 million. What is the value of the company? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of the company
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