In the above example netphone decides to buyback some


Question - Netphone Inc. expects the following: UCFBT= $1 million in perpetuity from the beginning of year 3 there is no income prior to that.

Ignore loss carryovers for taxes.

Tax rate is 50%, amount of debt = 0

Rzero= 10%, Rb= 5%

In the above example, Netphone decides to buyback some shares using 1 million dollars of perpetual debt. This is done today. Find Netphone's equity value today.

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Finance Basics: In the above example netphone decides to buyback some
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