Weikopf AG, a subsidiary company of Denkel, expects annual free cash flows until infinity of 50 million USD. Weikopf has a debt-to-equity ratio of 1:2 and a levered beta of 1.3. The risk-free interest rate is 4% and the market risk premium is 10%. Debt is considered to be risk-free.

Ref)

The levered cost of equity=17.00%

The WACC of the company= 8.3333%

The market value of Weikopf=$600 million

Value of firm=$1222.49 million

Question) Examining the Modigliani & Miller theorem, do their initial propositions hold up? What would be the company value if the theorem is applied and why? What are potential pitfalls?