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company D is currently an unlevered firm. the company expects to generate $200 milllion of operating profits in perpetuity. the firm is considering a capital
company D is currently an unlevered firm. the company expects to generate $200 milllion of operating profits in perpetuity. the firm is considering a capital restructuring to have $500 million of debt. its cost of debt is 6%. unlevered firms in the same industry have cost of equity capital of 12%. the corporate tax rate is 30%.
a. what is the value of company D before capital restructuring?
b. what will be the value of company D after capital restructuring?
c. what will be the WACC of company D after capital restructuring?
i
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