What is debt-equity ratio, Finance Basics

Louis Futon Co. is currently an all-equity firm. The current market value of the company is $80 million. The corporate tax rate is 35%. What is the new value of the company if Louis Futon Co. converts to a debt-equity ratio of 1 with a pure recapitalization? What if the debt-equity ratio is 2? You may ignore the costs of financial distress.

Posted Date: 3/13/2013 6:24:02 AM | Location : United States







Related Discussions:- What is debt-equity ratio, Assignment Help, Ask Question on What is debt-equity ratio, Get Answer, Expert's Help, What is debt-equity ratio Discussions

Write discussion on What is debt-equity ratio
Your posts are moderated
Related Questions
Clientele Effect Theory Advance via Richardson Petit in 1977.It stated such different types of groups of shareholders or clientele have different type of preferences for divid

Looking at the income statement, balance sheet and cash flow statement of the company and relating it with the non financial factors, I have the important observations as below:-

What does it mean to say that individuals as a group are net suppliers of funds for financial institutions? What do you think the consequences might be in financial markets if indi

Describe the duties of the financial manager in a business firm? Financial managers calculate the firm's performance, define what the financial consequences will be if the firm

Your grandparents put $1,000 into a saving account for you when you were born 30 years ago. This account has been earning interest at a compound rate of 7%. What is its value today

Prudence buys a bond in EUR when it issued by the French government and inflation linked.  It offers a 2% yearly coupon.  She holds it for five years.             Par value: EUR

Explain the Giving Margin Money to Broker Marin  is  the  amount  of  money  which is provided  by customer to the brokers who have agreed to trade their securities. It may

Similarities between Equity Finance and Preference Similarities among Equity Finance and Preference are as follows: a) Both may be permanent whether preference share capita

Shareholders and Creditors Shareholders And Creditors or bond or debenture holders Bondholders are lenders or providers of long term debt capital.  Usually they will provi

Q1.  A local delivery company has purchased a delivery truck for $15,000.  The truck will be depreciated under MACRS as a five year property.  The trucks market value (salvage valu