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Kingdom of Saudi Arabia Ministry of Higher Education Dar Al-Uloom University ...

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Kingdom of Saudi Arabia Ministry of Higher Education Dar Al-Uloom University Der Al Uloom University 2. The following are the financial abstracts of a hypothetical company Debt-equity ratio of 3.25 : WACC is 16 % ; Rp = Ry =20%; cost of debt is 11 %; tax 35 %. If the EBIT = $ 86,000 every year forever. According to M&M Proposition with taxes a. What is the value of the firm Vu ? b. What will the value be if the company borrows $ 1.000.000 V,? c. Which of the M&M Propositions are you applying to calculate the value of the firm? Is the proposition proved or disproved in a & b

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