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Author Question: CashCow Inc. is all equity financed and generates perpetual annual EBIT of $100. Assume that the ... (Read 65 times)

chads108

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on: Apr 25, 2021
CashCow Inc. is all equity financed and generates perpetual annual EBIT of $100. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. CashCow has 150 shares outstanding and shareholders require a return of 10%. CashCow hires a new CEO, a Mr. Cowslowski, who spends 10% of EBIT on parties, houses and yachts. Assume that this spending is expected to continue in perpetuity. What price will the shares trade at after Mr. Cowslowski is hired? The tax rate is 40%.
◦ $3.20
◦ $3.40
◦ $3.60
◦ $3.80
◦ $4.00
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by chads108 on Apr 25, 2021

abctaiwan

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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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chads108

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Reply 2 on: Apr 25, 2021
Thanks for the timely response, appreciate it

CAPTAINAMERICA

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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