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Mojito Mint Company has a debt-equity ratio of. 40. The required return on the company's unlevered equity is 14 percent, and the pretax cost of
Mojito Mint Company has a debt-equity ratio of. 40. The required return on the company's unlevered equity is 14 percent, and the pretax cost of the firm's debt is 8.5 percent. Sales revenue for the company is expected to remain stable indefinitely at last year's level of $19,000,000. Variable costs amount to 70 percent of sales. The tax rate is 35 percent, and the company distributes all its earnings as dividends at the end of each year. a. If the company were financed entirely by equity, how much would it be worth? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of the company b. What is the required return on the firm's levered equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Required return Use the weighted average cost of capital method to calculate the value of the company. (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of the company What is the value of the company's equity? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of equity What is the value of the company's debt? Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of debt d. Use the flow to equity method to calculate the value of the company's equity. (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e 32.16.) Value of equity
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