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General Corporation has 100 million outstanding shares with a share price of $5, and it...

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Finance

  1. General Corporation has 100 million outstanding shares with a share price of $5, and it has outstanding debt with a market value of $300 million. Investors expect a 6% return on debt and 12% return on stock. With the consideration of Modigliani and Miller (MM) Position II without tax,

Jason Limited has 100 units of outstanding bonds with a coupon rate of 10%, in which the market price and the face value of each bond is $2,000. It is expected that the earnings before interest and tax (EBIT) of the firm would remain constant at $400,000 each year, and the unlevered cost of capital is at 20%. Calculate the firm value of Jason Limited with the consideration of Modigliani and Miller (MM) Proposition 1 with tax if the tax rate is 25%.

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