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Haparapara Jewels Ltd expects to earn pre-tax operating income of $12.91 million each year going forward in perpetuity. The firm has an unlevered cost of
Haparapara Jewels Ltd expects to earn pre-tax operating income of $12.91 million each year going forward in perpetuity. The firm has an unlevered cost of capital of 12.2% per annum and is expected to continue to pay corporate tax at a rate of 27.5% for the foreseeable future. Haparapara Jewels Ltd also has $44.5 million of permanent debt outstanding that currently trades at par and on which it pays $2.5 million in interest. A) What would be the value of Haparapara Jewels Ltd if it were all-equity financed? $ million (Round your answer to 3 decimal places) B) What is the value of Haparapara Jewels Ltd given the current amount of debt? $ million (Round your answer to 3 decimal places) c) What can Haparapara Jewels Ltd expect as after-tax income per year? $ million (Round your answer to 3 decimal places) D) What is the cost of equity for Haparapara Jewels Ltd? % (Round your answer to 2 decimal places)
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