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Jiminy Cricut Corp.'s management expect that it will generate $600,000 of pre-tax free cash flow each year into perpetuity. The firm's management target a debt-to-equity

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Jiminy Cricut Corp.'s management expect that it will generate $600,000 of pre-tax free cash flow each year into perpetuity. The firm's management target a debt-to-equity ratio of 0.75, and the firm's marginal tax rate is 21.0%. JCC's common stock beta is 1.0, the risk-free rate is 2.0% and the expected return to the market portfolio of all risky assets is 8.0%. JCC borrows at a rate of 3.5% per year. a. What is the required rate of return on Jiminy Cricut's common stock? b. What is the required return on Jiminy Cricut's assets (or unlevered common stock)? c. Using the WACC approach, what is JCC's market value of stock, market value of bonds, and total market value? Do not refer to your answer in part d. or part e. d. Using the APV approach, what is JCC's market value of stock, market value of bonds, and total market value? Do not refer to your answer in part c. or part e. e. Using the cash flow to equity approach, what is JCC's market value of stock, market value of bonds, and total market value? Do not refer to your answer in part c. or part d. Jiminy Cricut Corp.'s management expect that it will generate $600,000 of pre-tax free cash flow each year into perpetuity. The firm's management target a debt-to-equity ratio of 0.75, and the firm's marginal tax rate is 21.0%. JCC's common stock beta is 1.0, the risk-free rate is 2.0% and the expected return to the market portfolio of all risky assets is 8.0%. JCC borrows at a rate of 3.5% per year. a. What is the required rate of return on Jiminy Cricut's common stock? b. What is the required return on Jiminy Cricut's assets (or unlevered common stock)? c. Using the WACC approach, what is JCC's market value of stock, market value of bonds, and total market value? Do not refer to your answer in part d. or part e. d. Using the APV approach, what is JCC's market value of stock, market value of bonds, and total market value? Do not refer to your answer in part c. or part e. e. Using the cash flow to equity approach, what is JCC's market value of stock, market value of bonds, and total market value? Do not refer to your answer in part c. or part d

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