100% Original, Plagiarism Free, Tailored to your instructions

Order Now!

The value of the ? rm if it w… Show more Dragula, Inc., ha

The value of the ? rm if it w… Show more Dragula, Inc., has debt outstanding with a face value of $3.8 million. The value of the ? rm if it were entirely ? nanced by equity would be $12.3 million. The company also has 245,000 shares of stock outstanding that sell at a price of $38 per share. The corporate tax rate is 35 percent. What is the decrease in the value of the company due to expected bankruptcy costs? 1 Capital Structure and Nonmarketed Claims Suppose the president of the company in the previous problem stated that the company should increase the amount of debt in its capital structure because of the tax-advantaged status of its interest payments. His argument is that this action would increase the value of the company. How would you respond? 2Costs of Financial Distress Steinberg Corporation and Dietrich Corporation are identical ? rms except that Dietrich is more levered. Both companies will remain in business for one more year. The companies’ economists agree that the probability of the continuation of the current expansion is 80 percent for the next year, and the probability of a recession is 20 percent. If the expansion continues, each ? rm will generate earnings before interest and taxes (EBIT) of $2.9 million. If a recession occurs, each ? rm will generate earnings before interest and taxes (EBIT) of $1,050,000. Steinberg’s debt obligation requires the ? rm to pay $900,000 at the end of the year. Dietrich’s debt obligation requires the ? rm to pay $1.3 million at the end of the year. Neither ? rm pays taxes. Assume a discount rate of 14 percent. a. What are the current market values of Steinberg’s equity and debt? What about those for Dietrich? b. Steinberg’s CEO recently stated that Steinberg’s value should be higher than Dietrich’s since the ? rm has less debt, and, therefore, less bankruptcy risk. Do you agree or disagree with this statement. • Show less

Our Service Charter

  1. Excellent Quality / 100% Plagiarism-Free

    We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers.
  2. Free Revisions

    We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed.
  3. Confidentiality / 100% No Disclosure

    We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service.
  4. Money Back Guarantee

    If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit.
  5. 24/7 Customer Support

    We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.

Excellent Quality
Zero Plagiarism
Expert Writers

Instant Quote

Single spaced
approx 275 words per page
Urgency (Less urgent, less costly):
Total Cost: NaN

Get 10% Off on your 1st order!