Question
In: Finance
GTB, Inc. has a 20 percent tax rate and has $86,136,000 in assets, currently financed entirely...
GTB, Inc. has a 20 percent tax rate and has $86,136,000 in assets, currently financed entirely with equity. Equity is worth $6 per share, and book value of equity is equal to market value of equity. Also, let’s assume that the firm’s expected values for EBIT depend upon which state of the economy occurs this year, with the possible values of EBIT and their associated probabilities as shown below: State Pessimistic Optimistic Probability of state 0.53 0.47 Expected EBIT in state $ 5.80 million $ 19.80 million The firm is considering switching to a 25-percent-debt capital structure, and has determined that it would have to pay a 10 percent yield on perpetual debt in either event. What will be the break-even level of EBIT? (Enter your answer in dollars, not in millions. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS,
FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 1 year agoRelated Solutions
GTB, Inc., has a 20 percent tax rate and has $85,776,000 in assets, currently financed entirely...
GTB, Inc., has a 20 percent tax rate and has $85,776,000 in
assets, currently financed entirely with equity. Equity is worth $6
per share, and book value of equity is equal to market value of
equity. Also, let’s assume that the firm’s expected values for EBIT
depend upon which state of the economy occurs this year, with the
possible values of EBIT and their associated probabilities as shown
below: State Pessimistic Optimistic Probability of state 0.47 0.53
Expected EBIT in...
GTB, Inc., has a 20 percent tax rate and has $85,656,000 in assets, currently financed entirely...
GTB, Inc., has a 20 percent tax rate and has $85,656,000 in
assets, currently financed entirely with equity. Equity is worth $6
per share, and book value of equity is equal to market value of
equity. Also, let’s assume that the firm’s expected values for EBIT
depend upon which state of the economy occurs this year, with the
possible values of EBIT and their associated probabilities as shown
below:
State Pessimistic Optimistic
Probability of state 0.44 0.56
Expected EBIT in...
GTB, Inc. has a 25 percent tax rate and has $85,536,000 in assets, currently financed entirely...
GTB, Inc. has a 25 percent tax rate and has $85,536,000 in
assets, currently financed entirely with equity. Equity is worth $6
per share, and book value of equity is equal to market value of
equity. Also, let’s assume that the firm’s expected values for EBIT
depend upon which state of the economy occurs this year, with the
possible values of EBIT and their associated probabilities as shown
below:
State
Pessimistic
Optimistic
Probability of
state
0.42
0.58
Expected EBIT in...
GTB, Inc. has a 21 percent tax rate and has $100 million in assets, currently financed...
GTB, Inc. has a 21 percent tax rate and has $100 million in
assets, currently financed entirely with equity. Equity is worth $7
per share, and book value of equity is equal to market value of
equity. Also, let’s assume that the firm’s expected values for EBIT
depend upon which state of the economy occurs this year, with the
possible values of EBIT and their associated probabilities as shown
below:
State
Pessimistic
Optimistic
Probability of
state
0.45
0.55
Expected EBIT...
NoNuns Cos. has a 21 percent tax rate and has $299,520,000 in assets, currently financed entirely...
NoNuns Cos. has a 21 percent tax rate and has $299,520,000 in
assets, currently financed entirely with equity. Equity is worth
$32 per share, and book value of equity is equal to market value of
equity. Also, let’s assume that the firm’s expected values for EBIT
depend upon which state of the economy occurs this year, with the
possible values of EBIT and their associated probabilities as shown
below:
State
Recession
Average
Boom
Probability of state
0.20
0.55
0.25
Expected...
Your company faces a 34% tax rate and has $258 million in assets, currently financed entirely...
Your company faces a 34% tax rate and has $258 million in
assets, currently financed entirely with equity. Equity is worth
$8.80 per share, and book value of equity is equal to market value
of equity. Also, let's assume that the firm's expected values for
EBIT depend upon which state of the economy occurs this year, with
the possible values of EBIT and their associated probabilities as
shown below: State Pessimistic Optimistic Probability of State .25
.75 Expect EBIT in...
NoNuns Cos. has a 25 percent tax rate and has $302.40 million in assets, currently financed...
NoNuns Cos. has a 25 percent tax rate and has $302.40 million in
assets, currently financed entirely with equity. Equity is worth
$30 per share, and book value of equity is equal to market value of
equity. Also, let’s assume that the firm’s expected values for EBIT
depend upon which state of the economy occurs this year, with the
possible values of EBIT and their associated probabilities as shown
below:
State
Recession
Average
Boom
Probability of state
0.20
0.55
0.25...
NoNuns Cos. has a 25 percent tax rate and has $302.40 million in assets, currently financed...
NoNuns Cos. has a 25 percent tax rate and has $302.40 million in
assets, currently financed entirely with equity. Equity is worth
$30 per share, and book value of equity is equal to market value of
equity. Also, let’s assume that the firm’s expected values for EBIT
depend upon which state of the economy occurs this year, with the
possible values of EBIT and their associated probabilities as shown
below:
State
Recession
Average
Boom
Probability of state
0.20
0.55
0.25...
Daddi Mac, Inc. doesn’t face any taxes and has $285.60 million in assets, currently financed entirely...
Daddi Mac, Inc. doesn’t face any taxes and has $285.60 million
in assets, currently financed entirely with equity. Equity is worth
$34 per share, and book value of equity is equal to market value of
equity. Also, let’s assume that the firm’s expected values for EBIT
depend upon which state of the economy occurs this year, with the
possible values of EBIT and their associated probabilities as shown
below: State Recession Average Boom Probability of state 0.25 0.55
0.20 Expected...
Daddi Mac, Inc., doesn’t face any taxes and has $300.40 million in assets, currently financed entirely...
Daddi Mac, Inc., doesn’t face any taxes and has $300.40 million
in assets, currently financed entirely with equity. Equity is worth
$32 per share, and book value of equity is equal to market value of
equity. Also, let’s assume that the firm’s expected values for EBIT
depend upon which state of the economy occurs this year, with the
possible values of EBIT and their associated probabilities as shown
below:
State Recession Average Boom
Probability of state .25 .60 .15
Expected...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Post a reflective comment about the article "When Money gets in the way". 1). Consider how...
- 2- You are a researcher studying the affect of happiness between office workers, students, and musicians....
- You have completed the Cash Flow statement. Pleased with your work so far, Barry asks you...
- java programing project Implement a program that computes the Fibonacci of a specified number, the factorial...
- Team Case #3: Rural Utility Your consulting team has been brought in by the Board chairperson...
- I have a question pertaining to ruby on rails. I was wondering if there is a...
- For the past two years, the United States has imposed tariffs (tax) on imports from China....
ADVERTISEMENT