What would the value of the firm be if it was financed entirely with equity?


Capital Structure after a while Corpoobjurgate Taxes

1. The market prize of a decided after a while $500,000 of claim is $1,700,000. EBIT is expected to be a perennity. The pretax concern objurgate on claim is 10 percent. The troop is in the 34- percent tax bracket. If the troop was 100-percent equity financed, the equityholders would claim a 20-percent recompense.

a. What would the prize of the decided be if it was financed altogether after a while equity?

b. What is the net proceeds to the stockholders of this levered decided?