If a company issues €52,500 worth of debt and has a corporate tax rate of 35%, what is the PV of the debt tax shield?

The risk that refers to the variability of a company's cash flows is called:

The complete termination of the firm as a going concern is called a:

Smith Enterprises has a weighted average cost of capital of 12% and a cost of debt of 7%. Assuming a D/E-ratio of .60, what is the company's cost of equity?

You are considering a recapitalization plan that would convert Bavarian Brew (BB) from an all equity capital structure to one including debt. Currently BB has 250,000 shares outstanding, which are trading at €36. The proposal calls for the issuance of €3,600,000 in long-term debt at an interest rate of 9%. The proceeds would then be used to repurchase 100,000 shares for a total of €3,600,000. BB's EBIT is €1,500,000. The required return on assets for firms in the industry is 12%. Assume that there are no corporate or personal income taxes. What is the required return of the firm's stock after the restructuring according to M and M Proposition I?

You are considering a recapitalization plan that would convert Bavarian Brew (BB) from an all equity capital structure to one including debt. Currently BB has 250,000 shares outstanding, which are trading at €36. The proposal calls for the issuance of €3,600,000 in long-term debt at an interest rate of 9%. The proceeds would then be used to repurchase 100,000 shares for a total of €3,600,000. BB's EBIT is expected to be €1,500,000. The required return on assets for firms in the industry is 12%. Assume that there are no corporate or personal income taxes. At which level of EBIT will BB shareholders earn a zero EPS under the proposed capital structure?

The unlevered cost of capital for Bavarian Brew is 15% and its cost of debt is 6%. Assuming a debt/equity ratio of .45 what is the company's cost of equity? Assume no taxes.

The unlevered cost of capital for Bavarian Brew is 15% and its cost of equity is 19.05%. Assuming a debt equity ratio of .45 what is the company's cost of debt? Assume no taxes.

You are considering a recapitalization plan that would convert Bavarian Brew (BB) from an all equity capital structure to one including debt. Currently BB has 250,000 shares outstanding, which are trading at €36. The proposal calls for the issuance of €3,600,000 in long-term debt at an interest rate of 9%. The proceeds would then be used to repurchase 100,000 shares for a total of €3,600,000. BB's EBIT is €1,500,000. The required return on assets for firms in the industry is 12%. Assume that there are no corporate or personal income taxes.

What is the required return of the firm's stock before the restructuring according to M and M Proposition I?

You are considering a recapitalization plan that would convert Bavarian Brew (BB) from an all equity capital structure to one including debt. Currently BB has 250,000 shares outstanding, which are trading at €50. The proposal calls for the issuance of €3,600,000 in long-term debt at an interest rate of 9%. The proceeds would then be used to repurchase 100,000 shares for a total of €3,600,000. BB's EBIT is expected to be €1,500,000. The required return on assets for firms in the industry is 12%. Assume that there are no corporate or personal income taxes. What are the EPS after the recapitalization?