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Fill the gaps for 1999. Use 20 year Bond yield What is the present value...

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Question

Accounting

Fill the gaps for 1999.

Use 20 year Bond yield

What is the present value of tax shield with respect to EACH BOND GRADE?

Use the 5 yr CAGR for sales growth

Use the current EBIT/SALES ratio to calculate the EBIT for 1999

1999 Pro Forma

Actual

No Debt

AAA

AA

A

BBB

Bond Yield

Sales

1,423.2

EBIT

753.3

Interest

(2.2)

Pretax Earnings

755.5

Taxes @ 38%

287.6

Net Income

467.9

Interest Coverage

Interest Coverage Needed

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