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iogann1982 [59]
3 years ago
9

Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0%

debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%. Refer to the data for Eccles Inc. What is the value of the firm according to MM with corporate taxes?
Business
1 answer:
Feliz [49]3 years ago
6 0

Answer:

$587,500

Explanation:

You are required to calculate the value of the levered firm;

vL = vU + Dt, whereby;

vL = Value of levered firm

vU = value of unlevered firm

Dt = debt * tax ; which is the tax shield

Find value of unlevered firm;

vU = [EBIT(1-tax) ]/ rE

    = [100,000(1-0.30)] / 0.16

    = 437,500

Value of levered firm;

vL = 437,500 + (500,000*0.30)

   = 437,500 +150,000

   = $587,500

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Explanation:

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When the sponsor-investigator holds the ind for an investigational drug he or she is responsible for annual reporting of which o
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Daniels Transport has operating income of $68,200, interest expense of $210, dividends paid of $320, depreciation of $12,400, ot
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Answer:

Option (a) is correct.

Explanation:

Given that,

Operating income = $68,200

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Depreciation = $12,400

Other income = $2,100

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Retained earnings = $29,700

Income before taxes:

= Operating income - Interest expense + Other income

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= $70,090

Net income:

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= 48,500 shares

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Maizie files a suit against NuProducts, Inc. NuProducts responds that even if Maizie's statement of the facts is true, according
ycow [4]

Answer: 3. a motion to dismiss.

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When a party believes that a case has no legal basis, in other words the party does not believe that what they did warrants a court case, they would file a motion to dismiss so as not to waste resources fighting something they see as frivolous.

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