Mr JGU was now contemplating starting a new business. He needed to raise money for the new business. While he liked the steady dividends from JGBS, he was open to selling 40% of JGBS equity to a partner. He called in BBA Consultants for advise. The Consultant noted that Mr JGUs opportunity cost was steady at 15% so only one of the various approaches to valuing a levered company seemed appropriate. He used that approach.

Name the approach selected by the consultant. [1]

What would be the value of equity in JGBS now? [3]

How much could he raise for his new venture if he sold a 40% stake in JGBS? What would be the value of his remaining stake in JGBS? [1]