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Tybo Corporation adjusts its debt so that its interest expenses are 18% of its free cash flow. Tybo is considering an expansion that will generate
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Tybo Corporation adjusts its debt so that its interest expenses are 18% of its free cash flow. Tybo is considering an expansion that will generate free cash flows of $3 million this year and is expected to grow at a rate of 4% per year from then on. Suppose Tybos marginal corporate tax rate is 21%.
If the unlevered cost of capital for this expansion is 10%, what is its unlevered value?
$53 million
$50 million
$48 million
$45 million
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