Question
Assume that you own a business, and are provided with the following information. The cost of the firms levered equity is 14%. Debt-equity ratio is
Assume that you own a business, and are provided with the following information. The cost of the firms levered equity is 14%. Debt-equity ratio is 30%. The interest payments are $37,000 at the end of each year. Estimated annual sales are $1.25 million. Annual cost of goods sold will be $670,000. Estimated annual general and administrative costs are $405,000. The cash flows are expected to remain the same in perpetuity. Assume a corporate tax rate of 35%.
Calculate the following. (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
The value of the firms equity using the flow to equity approach | $ |
The total value of the company | $ |
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