Tool manufacturing has an expected ebit

Assignment Help Financial Management

Reference no: EM131185413

Tool Manufacturing has an expected EBIT of $58,000 in perpetuity and a tax rate of 35 percent. The firm has $150,000 in outstanding debt at an interest rate of 8.2 percent, and its unlevered cost of capital is 12 percent. What is the value of the firm according to M&M Proposition I with taxes? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) Value of the firm $

Reference no: EM131185413

Questions Cloud

What is the horizon value : Capsim Corporation is undergoing a restructuring, and its free cash flows are expected to be unstable during the next few years. However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is e..

What is the modified duration at that same time : You just started work at a wealth management firm and your boss asks you to evaluate a 30-year bond with a face value of $1,000 that, according to the prospectus, you can purchase next month (01-June-2016) when it is initially issued. What is the mod..

Tax rate and dividend payout rate will also remain constant : The most recent financial statements for Beneke Fabricators, Inc., follow. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other ex..

Average net nonoperating obligations : The fiscal 2009 financial statements of Lowell Inc.'s shows average net operating assets (NOA) of $3,708,639 thousand, average net nonoperating obligations (NNO) of $630,065 thousand, average total liabilities of $1,753,554 thousand, and average equi..

Tool manufacturing has an expected ebit : Tool Manufacturing has an expected EBIT of $58,000 in perpetuity and a tax rate of 35 percent. The firm has $150,000 in outstanding debt at an interest rate of 8.2 percent, and its unlevered cost of capital is 12 percent. What is the value of the fir..

Administrative expenses and depreciation expense : Electro Wizard Company produces a popular video game called Destructo which sells for $32. Last year ElectroWizard sold 50,000 Destructo games, each of which costs $6 to produce. Electro Wizard incurred selling and administrative expenses of $80,000 ..

What is her cash flow under the current capital structure : Desert Rose, Inc., a prominent consumer products firm, is debating whether to convert its all-equity capital structure to one that is 30 percent debt. Currently, there are 20,000 shares outstanding, and the price per share is $57. What is her cash fl..

Which one of the will increase the cash flow from assets : Which one of the following will increase the cash flow from assets, all else equal?

Calculate the sustainable growth rate : You are given the following information for Goods, Inc.: Profit margin 5.9 % Total asset turnover 1.7 Total debt ratio 0.40 Payout ratio 30 % Calculate the sustainable growth rate.

User Account

All Pages