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Firm leverage has $10 million permanent debt finan...

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Question

Firm leverage has $10 million permanent debt financed at an interest rate of 8%. The corporate tax rate is 31%. Compared with an identical unlevered firm, what amount comes closest to the present value of perpetual tax savings from debt for Firm Leverage? 1. $272,000 2. $800,000 3. $3,100,000 4. $8,000,000 5. $31,000,000 Microsoft is currently trading at $36 per share. You have 10,000 shares of Microsoft. The company is going to announce a 3-1 stock split to the public. What is the total value of your stock after the stock split? 1. $120,000 2. $240,000 3. $360,000 4. $720,000 5. $1,080,000 Woody's fish and tackle is unlevered with 10,000 shares outstanding. The Earnings before Interest and Taxes (EBIT) is $4,000. Given a corporate tax rate of 34%, what is the earnings per share? 1. 0.264 2. 0.033 3. 0.050 4. 0.066 5. 0.099

 

Paper#7122 | Written in 18-Jul-2015

Price : $25
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