Business, 27.01.2021 14:00 Loveraeee17

1. According to the information for two firms (levered and unlevered firms) given below, compute the value of the levered firm including the values of the tax-shield benefits of the
debt and bankruptcy-agency costs. Assuming zero growth and 100% dividend payout,
permanent debt, so treated as a perpetuity. (30p)
NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS.
Debt amount for levered firm
:
$50.000
NOI for each firm
:
$40.000
Interest rate for the debt
:
10%
Stock market return
12%
Tax rate for each firm
20%
5%
Treasury bill rate
Present value for bankruptcy-agency cost
Beta (B) coefficient for unlevered firm
$38.000
:
0.9

Answers: 1

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