What is the present value of the tax shield?3 What is the size of debt?

Assuming that there is an unlevered firm and a levered firm. The basic information is given by the following table.

 

Table1: Information of the firms

  Unlevered firm Levered firm
EBIT 10000 10000
Interest 0 3200
Taxable income    
Tax (tax rate: 34%)    
Net income    
CFFA

Assuming that cost of debt =8%; unlevered cost of capital =10%; systematic risk of the asset is 1.5

1 Fill in the blanks

2 What is the present value of the tax shield?3 What is the size of debt?

4 Calculate the following values:
a) value of unlevered firm; b) value of the levered firm; c) equity value; d) Cost of equity; e) cost of capital; f) systematic risk of the equity

5 Suppose that the firm changes its capital structure so that the debt-to-equity ratio is 1.0, then recalculate the systematic risk of the equity

find the cost of your paper

Write a program that generates a random number between 1 and 100 and asks the user to guess what the number is.

Using c++ Random Number Guessing Game Write a program that generates a random number between 1 and 100 and asks the user to guess what the number is. If the….

Calculate the average distance of Mercury, Venus and Earth to Mars. Which one of these planets is the closest to Mars on average?

The table below lists the average distance R to the Sun and orbital period T of the first planets: Distance Orbital Period Mercury 0.39 AU 88 days Venus 0.72 AU….

Alper is the owner of Cube-XYZ, a perfect cube-shaped planet, and builds a mansion on one vertex of the cube, and distinct houses on the seven other vertices.

Alper is the owner of Cube-XYZ, a perfect cube-shaped planet, and builds a mansion on one vertex of the cube, and distinct houses on the seven other vertices. Houses are….