Question cavo corporation expects an ebit of 25300 every

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Question :

Cavo Corporation expects an EBIT of $25,300 every year evermore. The company presently has no debt, and its cost of equity is 11 %. The corporate tax rate is 35 %.

a. What is the existing value of the company? (Do not round intermediate evaluations and round your final answer to 2 decimal places.

Current value    $

b-1 Assume the company can borrow at 8%. What may the value of the firm be if the company takes on debt equal to 60% of its unlevered value? (Do not round intermediate evaluations and round your final answer to 2 decimal places.

Value of the firm              $

b-2 Assume the company will borrow at 8%. What may the value of the firm be if the company takes on debt equal to 100% of its unlevered value? (Do not round intermediate evaluations and round your final answer to 2 decimal places.

Value of the firm              $

c-1 Evaluate the value of the firm be if the company takes on debt equal to 60 % of its levered value? (Do not round intermediate evaluation and round your final answer to 2 decimal places. (e.g., 32.16))

Value of the firm              $

c-2 What may the value of the firm be if the corporation takes on debt equal to 100 % of its levered value?

Value of the firm              $

Reference no: EM13349622

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