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In: Finance

(10) This is a world with NO TAXES (perfect capital markets). The firm is a no...

  1. (10) This is a world with NO TAXES (perfect capital markets). The firm is a no growth firm and pays out all of its earnings as dividends. It is originally all equity financed (unlevered). The firm decides to issue $500,000 in debt to repurchase stock. The cost of debt is 4%. Fill in ALL the missing values in the table.

Unlevered

Levered

EBIT

200,000

200,000

INTEREST

Earnings (Net Income)

#Shares

20,000

Ru

8%

8%

RE

EPS

Price

Value of the Firm

Solutions

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