Kito electronics has an EBIT of $200,000 a growth rate of 6% and a tax rate of 40%. In order to grow Kito must receive 20% of EBIT on net optional assets. Kito has $300,000at 8% debt outstanding and a similar company with no debt has accost of equity of 11%. According to MM extension with growth what is the value of Kito’s tax shields.

| March 13, 2016

Kito electronics has an EBIT of $200,000 a growth rate of 6% and a tax rate of 40%. In order to grow Kito must receive 20% of EBIT on net optional assets. Kito has $300,000at 8% debt outstanding and a similar company with no debt has accost of equity of 11%.

According to MM extension with growth what is the value of Kito’s tax shields.

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