What will the value of the firm be if it converts to 50

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New Schools, Inc. expects an EBIT of RM7,000 every year forever. The firm currently has 5.debt, and its cost of equity is 17 percent. The firm can borrow at 8 percent and the corporate tax rate is 34 percent. What will the value of the firm be if it converts to 50 percent debt?

New Schools, Inc. has declared an $8 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Green Fiddle stock sells for $71.50 per share, and the stock is about to go ex-dividend. What will the ex-dividend price be?

Reference no: EM132376574

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