Estimating the value of equity after the change in capital structure

Company ABC is expected to have EBIT (earnings before interest and tax) of $1 million per year forever and the market value of the shares of the company currently is $8 million. At present the company has no debt. to raise $3 million of perpetual debt at 8%, which will be risk-free, and use that… Continue reading Estimating the value of equity after the change in capital structure

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