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  3. a b c mitra corp. is currently all equity...

a b c Mitra Corp. is currently all equity...

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Finance

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Mitra Corp. is currently all equity financed and has a value of $70 million. Investors currently require a return of 15.5% on common stock. Mitra pays no taxes. Mitra plans to issue $20 million of debt with a return of 8 percent and use the proceeds to repurchase common stock. What will be the expected return on the common stock after the proposed debt issue? 13.63% 17.00% 17.38% 18.00% Jellybean Co, is currently all-equity financed and has a value of $800,000. It is planning to issue $200,000 of permanent debt with an interest rate of 7% and use the proceeds to buy back stock. With the debt there is a 15 percent probability of financial distress, in which case the firm will have a present value of $215,000. Given a tax rate of 30 percent, what will be the value of the firm with the debt? $698,750 $712,400 $763,250 $827,750 The only capital investment required for a small project is investment in inventory. Profits this year are expected to be $10,000, and inventory will increase from $4,000 to $5,000. What is the cash flow from the project? O $5,000 O $9,000 $10,000 $11,000

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