Data Flex Inc. has a debt-equity ratio of 35 percent. The required rate of return on the companys unlevered equity is 13.1 percent and the pretax cost of debt is 6.4 percent. Sales revenue for the company is expected to remain stable indefinitely at last years level of $19.3 million. Variable costs amount to 60 percent of revenues. The tax rate is 21 percent and Data Flex distributes all its end-of-year earnings as dividends.

A. If Data Flex were financed entirely by equity, determine the value of the company as an unlevered firm.

B. Determine the required return on Data Flexs levered equity.

C. Use the weighted average cost of capital method to calculate the value of the firm and then based of this value determine the value of a) the companys equity and b) the companys debt.

D. Use the flow to equity method to calculate the value of the firms equity.