Value of the company
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Gided Cage Corp. uses no debt. The weighted average cost of capital is 15 percent. The current market value of the company is $60 million. The corporate tax rate is 40 percent.
a. What is the value of the company if Gilded Cage converts to debt-equity ratio of 1?
b. What if the debt-equity ratio is 2?
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This discusses the value of the company.
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Value of Debt when debt equity ratio is 1, Hence, Proportion of debt to market value will be 1/2
Market value ...
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