17.13 Folgers Air Transport (FAT) is currently an unleveraged firm. It is considering a capital restructuring to

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17.13 Folgers Air Transport (FAT) is currently an unleveraged firm. It is considering a capital restructuring to allow $500 in debt. The company expects to generate $151.52 in cash flows before interest and taxes, in perpetuity. Its cost of debt capital is 10 percent and the corporate tax rate is 34 percent. Unleveraged firms in the same industry have a cost of equity capital of 20 percent.

Using WACC, APV, and FTE, what will be the new value of FAT?

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