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A firm has free cash flow of 3,500,000 USD. When the firm was unlevered it had a cost of equity of 9%. Then it went

A firm has free cash flow of 3,500,000 USD. When the firm was unlevered it had a cost of equity of 9%.

Then it went for permanent leverage by borrowing 500,000 USD at 8% interest rate. Corporate tax rate

40%. What is the WACC of the company? If FCF increase to 4 million next year, what will be the value of

the company? (4+2=6)

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