Consider the following table which provides data for a levered firm. Assume annual cash flows will grow in perpetuity.

A. Calculate the current value of the levered firm (2 marks)

B. Calculate the current value of the levered equity (1 mark)

Value Item full name Item abbreviation OFCF (millions) 8 $4.3 2.5% pa 4.5% pa 8% pa 45% pa Operating free cash flow Growth rate of OFCF Cost of debt Cost of levered equity Equity to assets ratio, where the asset value includes tax shields Corporate tax rate TEL EVL tc 30%