Janetta corp has an ebit rate of 975000 per year that is, Finance Basics

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Janetta corp has an ebit rate of 975000 per year that is

Question: Janetta Corp. has an EBIT rate of $975,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 14 percent and the corporate tax rate is 35 percent. The company has a perpetual bond issue outstanding with a market value of $1.9 million. What is the value of the company? If the CFO of the company informs the company president that value of the company is $4.8 million. Would the CFO be correct? Explain.

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Finance Basics: Janetta corp has an ebit rate of 975000 per year that is

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