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ebit of 500,000 tax rate: 30% market valueof debt 1,000,000 that pays coupon of 8%...

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Finance

ebit of 500,000 tax rate: 30% market valueof debt 1,000,000 that pays coupon of 8% cost of equity of 12%

the firm will pay out all net earnings in dividends and will not grow

1. what is the total market value of firm

2. what is firms wacc

3.they pan to increase debt by 500,000 and use proceeds to repurchase equity. cost of new debt is 10% cost of equity will be 12.4% all other things the same. should the firm do the capital restructuring.

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