subject
Business, 24.11.2021 15:40 Shelbs01

Case I: Capital structure theory (no tax) WACC : 10%
Debt-to-firm value(D/V): 60%
Cost of debt : 6%
1) In Case I, when the debt-to-firm value decreases from 60% to 50%,
i) Figure out the new WACC. Does the capital structure affect WACC?
ii) Figure out the new WACC. Does the capital structure affect the cost of equity?
Case II: Capital structure theory (corporate tax)
EBIT : $40 million
Tax rate : 50%
Unlevered cost of capital : 10%
2) In Case II, when the debt increases from $0 to $40mil.,
i) Figure out the unlevered firm’s value.
ii) Figure out the levered firm’s value.
iii) What is the optimal capital structure? In other words, does the capital structure affect the WACC?


Case I: Capital structure theory (no tax)

WACC : 10%
Debt-to-firm value(D/V): 60%
Cost of debt :

ansver
Answers: 2

Another question on Business

question
Business, 22.06.2019 11:30
(select all that apply) examples of email use that could be considered unethical include denying receiving an e-mail requesting that you work late forwarding a chain letter asking for donations to a good cause sending a quick message to your friend about last weekend sending your boss the monthly sales figures in an attachment setting up a meeting with your co-worker sharing a funny joke with other employees
Answers: 2
question
Business, 23.06.2019 01:30
Why would adjusting the money supply be expected to increase economic growth during a recession? a) increasing the money supply will encourage more saving. b) increased money supply will encourage more spending and investment. co) decreased money supply will encourage more spending and investment. d) recession is caused by too much
Answers: 3
question
Business, 23.06.2019 02:20
When the benefit of one particular use of a resource is greater than the opportunity cost, then that resource is which of the following? a. not scarce b. being used efficiently c. a normal good d. non-excludable
Answers: 2
question
Business, 24.06.2019 01:00
Lucas is planning a distribution strategy for his business. he is considering using direct marketing, direct selling, and automatic vending, which are all examples of retailing. select one: a. off-premise b. portfolio c. nonstore d. off-price e. direct
Answers: 2
You know the right answer?
Case I: Capital structure theory (no tax) WACC : 10%
Debt-to-firm value(D/V): 60%
Cost...
Questions
question
World Languages, 29.07.2019 00:30