Question
Milton Industries expects free cash flows of $9 million each year. Milton's corporate tax rate is 21%, and its unlevered cost of capital is 15%.
Milton Industries expects free cash flows of $9 million each year. Milton's corporate tax rate is 21%, and its unlevered cost of capital is 15%. Milton also has outstanding debt of $13.91 million, and it expects to maintain this level of debt permanently.
a. What is the value of Milton Industries without leverage?
b. What is the value of Milton Industries with leverage?
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Personal Finance QuickStart Guide
Authors: Morgen Rochard
1st Edition
1945051019, 978-1945051012
