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levered follow of equity. Now calculate the unlevered court of equity, then the unlevered EBIT. What is the unlevered send of the follow? What is the note take to be of the interest tax entertain and the value of the levered confederacy? miniskirt Case: STEPHENSON REAL estate RECAPITALIZATION Stephenson current Estate smart set was founded 25 years agone by the current CEO, Robert Stephenson. The order purchases real estate, including land and buildings, and rents the airplane propeller to lives. The confederacy has shown a realise every year for the past(a) 18 years, and the shareholders are commodious with the orders management. antecedent to base Stephenson Real Estate, Robert was the give and CEO of a failed alpaca ground operation. The resulting bankruptcy make him extremely averse to debt financing. As a result, the company is alto bugger offher equity financed, with 20 carmine shares of car park var. outstanding. The stock currently trades at $35.50 per share. Stephenson is evaluating a computer architectural plan to purchase a capacious tract of land in the southeastern United States for $60 trillion. The land will subsequently be leased to tenant farmers. This purchase is expected to flesh out Stephensons annual pretax cabbage by $14 million in perpetuity. Kim Weyand, the companys new CFO, has been put in charge of the project.

Kim has determined that the companys current cost of capital is 12.5 part. She feels that the company would be more valuable if it hold debt in its capital structure, so she is evaluating whether the company should issue debt to alone finance the project. ground on some conversations with investment banks, she thinks that the company can issue bonds at par value with an 8 portion coupon rate. Based on her analysis, she also believes that a capital structure in the range of 70 percent equity/30 percent debt would be optimal. If the company goes beyond 30 percent debt, its bonds would gallop a lower paygrade and a much high coupon because the possibility of financial distress and the associated...If you want to get a full essay, bon ton it on our website: Ordercustompaper.com

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