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Author Question: Based on the information below, what is Ezzel Enterprises optimal capital structure? (Read 457 times)

petersan

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Question 1

Assuming the following variables, what is the value of the firm according to MM with corporate taxes?

EBIT: $340,000 rd: 13% Tc: 35%

Debt: $600,000 rsU: 18%


$1,275,875


$1,337,500


$1,437,778


$1,546,250



Question 2

Based on the information below, what is Ezzel Enterprises’ optimal capital structure?

Debt = 30%; Equity = 70%; EPS = $3.02; Common share price = $28.50


Debt = 50%; Equity = 50%; EPS = $3.24; Common share price = $30.90


Debt = 85%; Equity = 15%; EPS = $3.76; Common share price = $33.60


Debt = 65%; Equity = 35%; EPS = $3.51; Common share price = $35.90



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Marked as best answer by petersan on Aug 7, 2023

xinyifff

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petersan

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Reply 2 on: Aug 7, 2023
Thanks for the timely response, appreciate it


sultana.d

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Reply 3 on: Yesterday
:D TYSM

 

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