Suppose that LilyMac Photography expects EBIT to be approximately $46,000 per year for the foreseeable future, and that it has 500 10-year, 5 percent annual coupon bonds outstanding. (Use Table 11.1.) What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac’s WACC?
Suppose that LilyMac Photography expects EBIT to be approximately $46,000 per year for the foreseeable future, and that it has 500 10-year, 5 percent annual coupon bonds outstanding. (Use Table 11.1.) What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac’s WACC?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Suppose that LilyMac Photography expects EBIT to be approximately $46,000 per year for the foreseeable future, and that it has 500 10-year, 5 percent annual coupon bonds outstanding. (Use Table 11.1.)
What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac’s WACC?
Transcribed Image Text:table 11.1
$0
Corporate Tax Rates
Tax Rate
$50,000
15%
75,000
25
100,000
34
335,000
39
10,000,000 34
15,000,000 35
18,333,333
38
35
Taxable Income
50,001
75,001
100,001
335,001
10,000,001
15,000,001
18,333,334
-
-
-
+
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