Question :
Cavo Corporation expects an EBIT of $25,300 every year evermore. The company presently has no debt, and its cost of equity is 11 %. The corporate tax rate is 35 %.
a. What is the existing value of the company? (Do not round intermediate evaluations and round your final answer to 2 decimal places.
Current value $
b-1 Assume the company can borrow at 8%. What may the value of the firm be if the company takes on debt equal to 60% of its unlevered value? (Do not round intermediate evaluations and round your final answer to 2 decimal places.
Value of the firm $
b-2 Assume the company will borrow at 8%. What may the value of the firm be if the company takes on debt equal to 100% of its unlevered value? (Do not round intermediate evaluations and round your final answer to 2 decimal places.
Value of the firm $
c-1 Evaluate the value of the firm be if the company takes on debt equal to 60 % of its levered value? (Do not round intermediate evaluation and round your final answer to 2 decimal places. (e.g., 32.16))
Value of the firm $
c-2 What may the value of the firm be if the corporation takes on debt equal to 100 % of its levered value?
Value of the firm $