Lone Star Industries has just issued 160,000 of perpetual 10 percent debt and used the proceeds to repurchase equity. The company expects to generate 75,000 of earnings before interest and taxes in perpetuity. The company distributes all its earnings as dividends at the end of each year. The firms un-levered cost of capital is 18 percent, and the corporate tax rate is 28 percent.

(a) What is the value of the company as an unlevered firm?

(b) Use the adjusted present value method to calculate the value of the company with leverage.

(c) What is the required return on the firms levered equity?

(d) Use the flow-to-equity method to calculate the value of the companys equity.

Please only attempt if you can solve the question with a proper explanation. Please do not copy from Chegg.