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Author Question: Mechano Construction Inc. generates perpetual annual EBIT of $500. The corporate tax rate is 35%. ... (Read 38 times)

big1devin

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on: Apr 25, 2021
Mechano Construction Inc. generates perpetual annual EBIT of $500. The corporate tax rate is 35%. Mechano has 300 shares outstanding that trade for $6.89. Mechano has debt worth $1,512 and its debt-to-equity ratio is 0.667. The CFO of Mechano is thinking about borrowing another $100 to repurchase shares. However, the additional debt will increase the present value of financial distress costs by $40. The CFO wants to maximize the value of the firm. What is the benefit of the additional debt minus the cost of the additional debt?
◦ -$5
◦ $0
◦ $5
◦ $35
◦ $40
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by big1devin on Apr 25, 2021

xiazhe

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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big1devin

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Reply 2 on: Apr 25, 2021
:D TYSM

ktidd

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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