Author Question: Orange Inc., a cell-phone manufacturer, is an all equity firm. At the end of the current year, the ... (Read 53 times)

Kthamas · **on:** Apr 25, 2021

Orange Inc., a cell-phone manufacturer, is an all equity firm. At the end of the current year, the CFO expects EBIT to be $100 and the same earnings are expected annually in perpetuity. The company is not growing so CAPEX and investments in net working capital are zero. The cost of equity for Orange is 10%. Orange's prime competitor is Verge Inc., manufacturer of the Blueberry smartphone. Verge is identical to Orange Inc. in every respect except that Verge has $130.44 of long term debt outstanding. What is the value of Verge Inc.? The corporate tax rate is 40%.
◦ $500
◦ $600
◦ $630
◦ $652
◦ $1,000

Viet Thy · **Reply #1 on:** Apr 25, 2021

A FREE account is required to view all solutions!

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.

Answer Preview

Only 59% of students answer this correctly