Assume that mm's theory holds with taxes. there is no growth, and the $40 of debt is expected to be permanent. assume a 40% corporate tax rate.
a. how much of the firm's value is accounted for by the debt-generated tax shield?
b. how much better off will uf's a shareholder be if the firm borrows $20 more and uses it to repurchase stock? "



step 1:
tax rate - tc =
a. permanent debt - d =
b. additional debt - d =

step 2:

a. tax shield formula =
b. tax shield formula =

benefit to shareholders =

Last week, linda's commission check was $84. if she earns a 12.5% commission on sales, what were her total sales?

Sara bought 12 3/4 cakes sara's friends ate 3/8 how much cake is left

Calculate the cost of each capital component—in other words, the after-tax cost of debt, the cost of preferred stock (including flotation costs), and the cost of equity (ignoring flotation costs). use both the capm method and the dividend growth approach to find the cost of equity. calculate the cost of new stock using the dividend growth approach. what is the cost of new common stock based on the capm? (hint: find the difference between re and rs as determined by the dividend growth approach and then add that difference to the capm value for rs.)assuming that gao will not issue new equity and will continue to use the same target capital structure, what is the company’s wacc? e. suppose gao is evaluating three projects with the following characteristics. each project has a cost of $1 million. they will all be financed using the target mix of long-term debt, preferred stock, and common equity. the cost of the common equity for each project should be based on the beta estimated for the project. all equity will come from reinvested earnings. equity invested in project a would have a beta of 0.5 and an expected return of 9.0%.equity invested in project b would have a beta of 1.0 and an expected return of 10.0%.equity invested in project c would have a beta of 2.0 and an expected return of 11.0%.analyze the company’s situation, and explain why each project should be accepted or rejected g