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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.)
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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
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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:
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Pessimistic
Optimistic
Probability of
state
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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
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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
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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:
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Probability of state
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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:
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Average
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Probability of state
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Daddi Mac, Inc. doesn’t face any taxes and has $285.60 million in assets, currently financed entirely...
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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
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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
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