Milton industries expects free cash flows of 4 million each


Question: Milton Industries expects free cash flows of $4 million each year. Milton's corporate tax rate is 35%, and its unlevered cost of capital is 13%. Milton also has outstanding debt of $8.07 million, and it expects to maintain this level of debt permanently.

a. What is the value of Milton Industries without leverage?

b. What is the value of Milton Industries with leverage?

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Finance Basics: Milton industries expects free cash flows of 4 million each
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