A tax rate of 20 has been introduced in the frog islands, Ask an Expert

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A tax rate of 20% has been introduced in the Frog Islands Republic. The value of Sun corporation is now 100.000€. Bright Star Co. debt has no changed. The required rate of return to Sun Co. continues being 7.5% and the risk free interest rate 5%.

Questions:

1) Why the value of the Sun Co. is now 100.000€?

2) Which is now the Bright Star equity fair value?

3) Which is now the Bright Star equity required rate of return? And it's WACC?

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Corporate Finance, Finance

Category:- Corporate Finance
Reference No.:- M9522901

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