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vekshin1
2 years ago
3

The Winter Wear Company has expected earnings before interest and taxes of $3,800, an unlevered cost of capital of 15.4 percent

and a tax rate of 22 percent. The company also has $2,600 of debt with a coupon rate of 5.7 percent. The debt is selling at par value. What is the value of this firm
Business
1 answer:
SCORPION-xisa [38]2 years ago
4 0

Answer:

$ 19,819

Explanation:

Calculation to determine the value of this firm

Using this formula

Firm Value = [ [ Earnings before interest and tax x (1 - tax rate) ] / Unlevered cost of capital ] + Amount of debt x tax rate

Let plug in the formula

Firm value= [ [ $ 3,800 x (1 - 0.22) ] / 0.154 ] + $ 2,600 x 22%

Firm value=[($3,800×.78)/0.154]+$572

Firm value=($2,964/0.154)+$572

Firm value=$19,246.75+$572

Firm value=$19,818.76

Firm value= $ 19,819 Approximately

Therefore the value of this firm will be $ 19,819

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A company made a profit of $25,000 over a period of 5 years on an initial investment of $10,000. What is its annualized ROI?

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I hope it helps, Regards.
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When you have carefully checked all the facts and your attitudes and still find that there’s just something about your superviso
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2 years ago
On March 11, 20XX, the existing or current (spot) one-year, two-year, three-year, and four-year zero-coupon Treasury security ra
Elan Coil [88]

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Explanation:

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2 years ago
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Answer:

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3 0
2 years ago
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