Concept explainers
a)
To calculate: The present value of the company.
Introduction:
A firm’s value is a measure of economy reflecting the market value of the business.
Answer:
The value of the firm is $101,833.33.
b)
To calculate: The value of the firm if a firm takes debt at 50% and if it takes 100% of its unlevered value.
Introduction:
A firm’s value is a measure of economy reflecting the market value of the business.
Answer:
The value of the levered firm at 50% and 100% debt of its unlevered value is $119,654.17 and $137,457.00.
c)
To calculate: The value of the firm if the firm takes debt at 50% and 100% of its levered value.
Introduction:
A firm’s value is a measure of economy reflecting the market value of the business.
Answer:
The value of the levered firm at 50% and 100% debt of its levered value is $123,434.34 and $156,666.67.
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Chapter 16 Solutions
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