Business, 06.06.2020 17:59 zachzach28280

A consultant has collected the following information regarding Young Publishing: Total assets $3,000 million, Tax rate 40% Operating income (EBIT) $800 million, Debt ratio 0%, Interest expense $0 million, WACC 10%, Net income $480 million, M/B ratio 1.00, Share price $32.00, EPS = DPS $3.20, The company has no growth opportunities (g = 0), so the company pays out all of its earnings as dividends (EPS = DPS). The consultant believes that if the company moves to a capital structure financed with 20% debt and 80% equity (based on market values) that the cost of equity will increase to 11% and that the pre-tax cost of debt will be 10%. If the company makes this change, what would be the total market value (in millions) of the firm?

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A consultant has collected the following information regarding Young Publishing: Total assets $3,000...

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