Sundevil Co currently has $500,000 of 3% perpetual debt on its books (market value of debt currently equals book value). Annual revenues are $1,000,000 per year with cash operating expenses of $500,000, and depreciation expense of 20,000 of into the perpetual future. The cost of unlevered equity is 6% and its tax rate is 30%. Assume that the change in WC will be zero and the firm will not purchase any fixed assets over the perpetual future of the firm.

a) Calculate the unlevered cash flow (UCF) for SparkyCo.

b) Calculate the value of the firm utilizing the adjusted present value approach (APV).

c) What is the value of the equity of the firm?