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Author Question: Reefer Trucking Inc. is expected to generate EBIT of $3 million annually in perpetuity (starting in ... (Read 57 times)

xclash

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on: Apr 25, 2021

Question 1

Reefer Trucking Inc. is an all equity firm that generates EBIT of $3 million annually in perpetuity (starting in one year). Reefer shareholders require a return of 11%, and the corporate tax rate is 35%. What is the market value of Reefer Trucking?
◦ $12.19M
◦ $17.73M
◦ $23.52M
◦ $27.27M

Question 2

Reefer Trucking Inc. is expected to generate EBIT of $3 million annually in perpetuity (starting in one year). Reefer is all equity financed and shareholders require a return of 11%. The corporate tax rate is 35%. Reefer is proposing to issue $4 million of perpetual bonds with an annual coupon of 9%. Assume the debt is used to repurchase stock and that Reefer never borrows more or repays its debts. What is the market value of Reefer Trucking after the new debt issue?
◦ $17.73M
◦ $19.13M
◦ $21.73M
◦ $28.67M
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by xclash on Apr 25, 2021

shayla

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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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xclash

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

ebonylittles

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Reply 3 on: Yesterday
Wow, this really help

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