GTB, Inc. has a 20 percent tax rate and has $86,076,000 in assets, currently financed entirely with equity. Equity is worth $6 per share, and a book value of equity is equal to the market value of equity.

Also, let’s assume that the firm’s expected values for EBIT depend upon which state of the economy occurs this year, with the possible values of EBIT and their associated probabilities as shown below:

The firm is considering switching to a 25-percent-debt capital structure and has determined that it would have to pay a 9 percent yield on perpetual debt in either event.

What will be the break-even level of EBIT? (Enter your answer in dollars, not in millions. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.) Get Finance homework help today

You are considering opening a new plant. The plant will cost

$ 96.5$96.5

million upfront and will take one year to build. After that, it is expected to produce profits of

$ 29.5$29.5

million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is

7.4 %7.4%.

Should you make the​ investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.

The NPV of the project will be

​$274.6274.6

million.  ​(Round to one decimal​ place.)You

should

make the investment.  ​(Select from the​ drop-down menu.)The IRR is

nothing​%.

​ (Round to two decimal​ places.)The maximum deviation allowable in the cost of capital estimate is

nothing​%.

​(Round to two decimal​ places.) Get Finance homework help today