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This question consists of two parts. Part 1: Paddington Industries expects EBIT of $18 million each year. Paddington's capital expenditure is expected to equal depreciation
This question consists of two parts. Part 1: Paddington Industries expects EBIT of $18 million each year. Paddington's capital expenditure is expected to equal depreciation each year. There will not be change in the net working capital. Paddington's corporate tax rate is 3596, and its unlevered cost of capital is 10%. Paddington also has outstanding debt of $40 million (market value), and it expects to maintain this level of debt permanently. a) The value of Paddington Industries without leverage is $ million. (Input number only as your answer. Round it to the nearest whole number.) b) The value of Paddington Industries with leverage is $ million. (Input number only as your answer. Round it to the nearest whole number.)
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