Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. lazare corporation expects an ebit of $22,500 ever

Lazare Corporation expects an EBIT of $22,500 every year forever. Lazare currently has no debt, and...

70.2K

Verified Solution

Question

Finance

Lazare Corporation expects an EBIT of $22,500 every yearforever. Lazare currently has no debt, and its cost of equity is 12percent. The firm can borrow at 7 percent. (Do not roundintermediate calculations. Round the final answers to 2 decimalplaces.)

  

a.

What is the corporate tax rate is 35 percent, what is the valueof the firm?

  

   Value of the firm$   

     

b.

What will the value be if the company converts to 60 percentdebt?

  

  Value of the firm$   

  

c.

What will the value be if the company converts to 60 percentdebt to 100 percent debt?

Answer & Explanation Solved by verified expert
4.1 Ratings (761 Votes)
a Unlevered Free cash flow EBIT1tax Rate 22500135 146250 Enterprise value without leverage or Unlevered value Unlevered Free cash flowUnlevered cost of equity 1462512    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

Why is the M3 subtype receptor found on smooth muscle fibers of the bronchioles? A detailed...

Medical Sciences
1.2K views

1. Medical clearance and risk stratification case study practice. Please carefully read the following case studies, answer...

Mechanical Engineering
1.2K views

A steam power plant operates on a regenerative Rankine cycle. Steam enters the turbine at 6...

Biology
1.2K views

What is an example of a keystone species in the ocean Oorca Killer whale O...

Physics
1.2K views

When steady state is reached switch S is opened Then the amount of heat rejected...

Basic Math
1.2K views

The difference of a number and 7 is 20 What is the number

Basic Math
1.2K views

You are hiking along the edge of the Green River (which is running straight in...

Basic Math
1.2K views

Determine whether the quadratic function shown below has a minimum or maximum, then determine the...

Algebra
1.2K views

Subtract the polynomials 4a b 4ab 3 4a b 3ab 9 4a b 4ab 3...

Accounting
1.2K views

4 When the auditor concludes that there is substantial doubt about the entity's ability to...

Accounting
1.2K views

Exercise 10-9 Straight Line l: Amortization Exercise 10-9 Straight-Line:...

Accounting
1.2K views

Use the above information to calculate ending inventory using LIFO for a company that uses...