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A tax rate of 20% has been introduced in the Frog Islands Republic. The value of Sun corporation is now 100.000€. Bright Star Co. debt has no changed. The required rate of return to Sun Co. continues being 7.5% and the risk free interest rate 5%.
Questions:
1) Why the value of the Sun Co. is now 100.000€?
2) Which is now the Bright Star equity fair value?
3) Which is now the Bright Star equity required rate of return? And it's WACC?
An investor buys a French government, 10-year bond, paying annual coupon of 4.5%. Face value = 1000. The investor is unsure of his investment horizon and considers 5 horizons: 5, 6
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