Gomez Computer Systems Has an EBIT of $200,000, a Growth

question 16

Multiple Choice

Gomez computer systems has an EBIT of $200,000, a growth rate of 6%, and its tax rate is 40%. In order to support growth, Gomez must reinvest 20% of its EBIT in net operating assets. Gomez has $300,000 in 8% debt outstanding, and a similar company with no debt has a cost of equity of 11%.
-According to the MM extension with growth, what is the value of Gomez's tax shield?

• A) $156,385
• B) $164,616
• C) $173,280
• D) $182,400
• E) $192,000

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Definitions:

Skin Breakdown

Refers to the deterioration of skin integrity, often occurring in immobile individuals, leading to conditions like ulcers.

Friction

The resistance that one surface or object encounters when moving over another, which can have implications in both physical phenomena and medical conditions.

Shear

A force that causes layers of material to slide past one another in opposite directions.

Immobility

The state of being unable to move or be moved.