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home / study / business / finance / finance questions and answers / rak, inc., has no debt outstanding and a total market value of $240,000. earnings before interest ... Question: RAK, Inc., has no debt outstanding and a total market value of $240,000. Earnings before interest... (4 bookmarks) RAK, Inc., has no debt outstanding and a total market value of $240,000. Earnings before interest and taxes, EBIT, are projected to be $26,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 18 percent higher. If there is a recession, then EBIT will be 20 percent lower. RAK is considering a $150,000 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 15,000 shares outstanding. RAK has a tax rate of 35 percent.

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