Solved: What is the value of milton ind without leverege, Finance Basics

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What is the value of milton ind without leverege

Problem:

Milton Industries expects free cash flow of $5 million each year. Milton's corporate tax rate is 35%, and its unlevered cost of capital is 15%. The firm also has outstanding debt of $19.05 million, and it expects to maintain this level of debt permanently.

a) What is the value of Milton Ind. without leverege?

b) What is the value of Milton Ind. with leverage?

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Finance Basics: What is the value of milton ind without leverege

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