EBK FUNDAMENTALS OF CORPORATE FINANCE
11th Edition
ISBN: 8220102801356
Author: Ross
Publisher: YUZU
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Question
Chapter 16, Problem 17QP
a)
Summary Introduction
To calculate: The present value of the company.
Introduction:
A firm’s value is a measure of economy reflecting the market value of the business.
Answer:
The value of the firm is $101,833.33.
b)
Summary Introduction
To calculate: The value of the firm if a firm takes debt at 50% and if it takes 100% of its unlevered value.
Introduction:
A firm’s value is a measure of economy reflecting the market value of the business.
Answer:
The value of the levered firm at 50% and 100% debt of its unlevered value is $119,654.17 and $137,457.00.
c)
Summary Introduction
To calculate: The value of the firm if the firm takes debt at 50% and 100% of its levered value.
Introduction:
A firm’s value is a measure of economy reflecting the market value of the business.
Answer:
The value of the levered firm at 50% and 100% debt of its levered value is $123,434.34 and $156,666.67.
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Question 29:
MM and Taxes Tempest Corporation expects an EBIT of $37,700 every year forever. The company
currently has no debt and its cost of equity is 11 percent. The tax rate is 22 percent.
What is the current value of the company?
Suppose the company can borrow at 6 percent. What will the value of the company be if it takes on debt equal to 50 percent of its unlevered value? What if it takes on debt equal to 100 percent of its unlevered value?
What will the value of the company be if it takes on debt equal to 50 percent of its levered value? What if the company takes on debt equal to 100 percent of its levered value?
65.)
Suppose Buyson Corporation’s projected free cash flow for next year is FCF1 = P150,000, and FCF is expected to grow at a constant rate of 6.5%. If the company’s weighted average cost of capital is 11.5%, what is the firm’s total corporate value?Group of answer choices
P3,150,000
P2,572,125P2,707,500
P2,850,000
P3,000,000
Plz use excel
Meyer & Co. expects its EBIT to be $97,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 13 percent. The tax rate is 24 percent.
What is the value of the firm?
What is the value if the company borrows $195,000 and uses the proceeds to repurchase shares?
What is the cost of equity after recapitalization?What is the WACC?
What are the implications of the firm’s decision to borrow?
Chapter 16 Solutions
EBK FUNDAMENTALS OF CORPORATE FINANCE
Ch. 16.1 - Why should financial managers choose the capital...Ch. 16.1 - What is the relationship between the WACC and the...Ch. 16.1 - What is an optimal capital structure?Ch. 16.2 - Prob. 16.2ACQCh. 16.2 - Prob. 16.2BCQCh. 16.2 - Prob. 16.2CCQCh. 16.3 - What does MM Proposition I state?Ch. 16.3 - What are the three determinants of a firms cost of...Ch. 16.3 - Prob. 16.3CCQCh. 16.4 - What is the relationship between the value of an...
Ch. 16.4 - If we consider only the effect of taxes, what is...Ch. 16.5 - Prob. 16.5ACQCh. 16.5 - What are indirect bankruptcy costs?Ch. 16.6 - Can you describe the trade-off that defines the...Ch. 16.6 - What are the important factors in making capital...Ch. 16.7 - Prob. 16.7ACQCh. 16.7 - What is the difference between a marketed claim...Ch. 16.7 - What does the extended pie model say about the...Ch. 16.8 - Prob. 16.8ACQCh. 16.8 - Why might firms prefer not to issue new equity?Ch. 16.8 - Prob. 16.8CCQCh. 16.9 - Do U.S. corporations rely heavily on debt...Ch. 16.9 - What regularities do we observe in capital...Ch. 16.10 - Prob. 16.10ACQCh. 16.10 - Prob. 16.10BCQCh. 16 - Maximizing what will maximize shareholder value?Ch. 16 - What is most closely related to a firms use of...Ch. 16 - Give an example of a direct cost of bankruptcy.Ch. 16 - Prob. 16.7CTFCh. 16 - Prob. 1CRCTCh. 16 - Prob. 2CRCTCh. 16 - Optimal Capital Structure [LO1] Is there an easily...Ch. 16 - Observed Capital Structures [LO1] Refer to the...Ch. 16 - Financial Leverage [LO1] Why is the use of debt...Ch. 16 - Homemade Leverage [LO1] What is homemade leverage?Ch. 16 - Prob. 7CRCTCh. 16 - Prob. 8CRCTCh. 16 - Prob. 9CRCTCh. 16 - Prob. 10CRCTCh. 16 - Prob. 1QPCh. 16 - Prob. 2QPCh. 16 - Prob. 3QPCh. 16 - Prob. 4QPCh. 16 - MM and Stock Value [LO1] In Problem 4, use MM...Ch. 16 - Prob. 6QPCh. 16 - Prob. 7QPCh. 16 - Prob. 8QPCh. 16 - Homemade Leverage and WACC [LO1] ABC Co. and XYZ...Ch. 16 - Prob. 10QPCh. 16 - MM and Taxes [LO2] In the previous question,...Ch. 16 - Calculating WACC [LO1] Twice Shy Industries has a...Ch. 16 - Calculating WACC [LO1] Braxton Corp. has no debt...Ch. 16 - MM and Taxes [LO2] Meyer Co. expects its EBIT to...Ch. 16 - Prob. 15QPCh. 16 - MM [LO2] Tool Manufacturing has an expected EBIT...Ch. 16 - Prob. 17QPCh. 16 - Homemade Leverage [LO1] The Day Company and the...Ch. 16 - Weighted Average Cost of Capital [LO1] In a world...Ch. 16 - Cost of Equity and Leverage [LO1] Assuming a world...Ch. 16 - Business and Financial Risk [LO1] Assume a firms...Ch. 16 - Stockholder Risk [LO1] Suppose a firms business...Ch. 16 - Prob. 1MCh. 16 - Prob. 2MCh. 16 - Prob. 3MCh. 16 - Stephenson Real Estate Recapitalization Stephenson...Ch. 16 - Stephenson Real Estate Recapitalization Stephenson...
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