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Reacher Technology's EBIT was $40 million last year and is not expected to grow (g=0) and pays out 100% of earnings as dividends annually. The firm is currently financed with all equity and it has 10 million shares outstanding and is considering recaptizing its equity with debt where new debt would be issued and proceeds used to buyback stock. Show the firm's market value of operations, MV of debt, MV of equity, shares outstanding, and stock price for each level of debt the firm is considering. EBIT= $ 40.00 FCF= Debt/Value WACC MV MV of Debt MV of Equity #Shares Stock Price 0% 8.90% 10 10% 8.64% 9 20% 8.49% 8 30% 7 8.46% 8.80% 40% 6 50% 9.52% 5 60% 10.72% 4 70% 12.08% 3 and re- Complete Reacher's income state each debt level. Show estimate stock price using the constant growth formula: me, dividends per share, RO D(1+9 P. rs-9 = Income Statement 0% 10% 20% 30% 40% 50% 60% 70% EBIT INT EBT -TAX NI DPS ROE Pol Reacher Technology's EBIT was $40 million last year and is not expected to grow (g=0) and pays out 100% of earnings as dividends annually. The firm is currently financed with all equity and it has 10 million shares outstanding and is considering recaptizing its equity with debt where new debt would be issued and proceeds used to buyback stock. Show the firm's market value of operations, MV of debt, MV of equity, shares outstanding, and stock price for each level of debt the firm is considering. EBIT= $ 40.00 FCF= Debt/Value WACC MV MV of Debt MV of Equity #Shares Stock Price 0% 8.90% 10 10% 8.64% 9 20% 8.49% 8 30% 7 8.46% 8.80% 40% 6 50% 9.52% 5 60% 10.72% 4 70% 12.08% 3 and re- Complete Reacher's income state each debt level. Show estimate stock price using the constant growth formula: me, dividends per share, RO D(1+9 P. rs-9 = Income Statement 0% 10% 20% 30% 40% 50% 60% 70% EBIT INT EBT -TAX NI DPS ROE Pol

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