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Morrow Corp. has an EBIT of $925,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 13 percent and the corporate tax rate is 25 percent. The company also has a perpetual bond issue outstanding with a market value of $2.55 million.


What is the value of the company?

Respuesta :

tanseershar

Answer:

The answer is given below;

Explanation:

WACC=EBIT*(1-t)/(E+D)

13%=$925,000*(1-25%)/(E+D)

E+D=$693,750/.13

E+D=$5,336,538

Where E+D is market value of firm

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