Jet Corporation expects an EBIT of $21,100 every year forever. The company curre

Question

Jet Corporation expects an EBIT of $21,100 every year forever. The company currently has no debt, and its cost of equity is 13 percent. The corporate tax rate is 35 percent.

What will the value of the firm be if the company takes on debt equal to 60 percent of its levered value? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

What will the value of the firm be if the company takes on debt equal to 100 percent of its levered value? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Jet Corporation expects an EBIT of $21,100 every year forever. The company currently has no debt, and its cost of equity is 13 percent. The corporate tax rate is 35 percent.

Explanation / Answer

Jet Corporation expects an EBIT of $21,100 every year forever. The company curre

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