What is the current value of your firm

Reference no: EM13266714

Assume your firm is zero-growth and pays all its net income in dividends each year Also assume your firm can borrow money when it needs to at an interest rate of 7%. Currently your firm's cost of equity (Rs) is 10%, but if any money is borrowed that cost will rise to 11%. Sales this year are expected to be $500,000 and operating costs are expected to be $400,000. Your firm's effective tax rate is 40%. Given these conditions, what is the current value of your firm? What will be the new value of your firm if it takes on $100,000 in debt?

Reference no: EM13266714

Questions Cloud

Determine the binding energy of the last neutron : Determine the binding energy of the last neutron in a 2311Na nucleus. The masses of the neutral atoms of 2311Na and 2211Na are 22.989770 u and 21.994437 u

Find what is the developed torque at the output : A 5 horsepower dc mahine is supplied with 120 V dc and delivers rated power at 1000 rpm. The machine has an efficiency of 80 %. What is the developed torque at the output

How much money will you have in savings : How much money will you have in savings when you retire in 15 years from now?

Obtain the angular acceleration : When a turntable rotating at 45 rev/min is shut off, it comes to rest in 20 s. Find the angular acceleration

What is the current value of your firm : Given these conditions, what is the current value of your firm? What will be the new value of your firm if it takes on $100,000 in debt?

Determine the percent change in eddy-current loss : A coil wound around a ferromagnetic core is supplied by a 120V, 25 Hz source. Determine the percent change in eddy-current loss if the coil is connected to a 60Hz source with the same flux density.

What is the standard deviation of the net income estimate : The forecast for your firm indicates there's a 25% chance that Net Income will be $15,000, a 50% chance it will be $20,000, and a 25% chance it will be $25,000.

Determine the equation representing the voltage wave : The flux through the window of a 20-turn coil varies with time in the following manner: flux=1.2 sin(28*t) Wb. Determine a) the frequency and rms value of the voltage generated in the coil, b) the equation representing the voltage wave.

Determine the maximum height sb reached by the ball : A boy tosses a ball in the vertical direction off the side of a cliff. if the initial velcoity of the ball is 15 m/s upward, determine the maximum height sb reached by the ball

User Account

All Pages