Lazare Corporation expects an EBIT of $26,500 every year forever. Lazare currently has no debt, and its cost of equity i
Posted: Sun May 29, 2022 6:07 pm
Lazare Corporation expects an EBIT of $26,500 every year
forever. Lazare currently has no debt, and its cost of equity is
15%. The firm can borrow at 10%. (Do not round
intermediate calculations. Round the final answers to 2 decimal
places. Omit $ sign in your response.)
a. If the corporate tax rate is 35%, what
is the value of the firm?
Value of the firm
$
b. What will the value be if the company
converts to 40% debt?
Value of the firm
$
c. What will the value be if the company
converts to 100% debt?
Value of the firm
$
forever. Lazare currently has no debt, and its cost of equity is
15%. The firm can borrow at 10%. (Do not round
intermediate calculations. Round the final answers to 2 decimal
places. Omit $ sign in your response.)
a. If the corporate tax rate is 35%, what
is the value of the firm?
Value of the firm
$
b. What will the value be if the company
converts to 40% debt?
Value of the firm
$
c. What will the value be if the company
converts to 100% debt?
Value of the firm
$