Kirk Construction has an outstanding debt with a market value of $75,000. The company's Weighted Average Cost of Capital (WACC) is 10%. Its upcoming Earnings Before Interest and Taxes (EBIT) is $10,000 (t-1). The EBIT is expected to grow by 5% per year indefinitely. The tax rate is 20%. What is the equity value of Kirk Construction? $85,000 $155,000 $160,000 $125,000

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
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Kirk Construction has an outstanding debt with a market value of $75,000. The company's Weighted Average Cost of Capital (WACC) is 10%. Its upcoming
Earnings Before Interest and Taxes (EBIT) is $10,000 (t-1). The EBIT is expected to grow by 5% per year indefinitely. The tax rate is 20%. What is the equity
value of Kirk Construction?
$85,000
$155,000
$160,000
$125,000
Transcribed Image Text:Kirk Construction has an outstanding debt with a market value of $75,000. The company's Weighted Average Cost of Capital (WACC) is 10%. Its upcoming Earnings Before Interest and Taxes (EBIT) is $10,000 (t-1). The EBIT is expected to grow by 5% per year indefinitely. The tax rate is 20%. What is the equity value of Kirk Construction? $85,000 $155,000 $160,000 $125,000
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