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Milton expects free cash flow of $5 million each year. Its corporate tax rate is 21%, and its unlevered cost of capital is 14%. It

Milton expects free cash flow of $5 million each year. Its corporate tax rate is 21%, and its unlevered cost of capital is 14%. It also has outstanding debt of $19.26

million, and it expects to maintain this level of debt permanently. The only friction is Corporate Taxes.

a. What is the value of milton without leverage?

b. What is the value of milton with leverage?

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