Calculate the unlevered value of yancey

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Yancey Industries' Free Cash Flow for the past 12 months is $2.0 Million, and the future expected growth rate of this FCF is 6.5%. Yancey has no debt in its current capital structure. Its Cost of Equity is 11.5%. Its tax rate is 35%. (Hint use Equations 26-16 and 26-17 from the textbook.)

Calculate the Unlevered Value of Yancey (Vu).

Calculate VL and rsL for the scenario whereby Yancey uses $8.0 Million Debt costing 8%.

Using the Unlevered Value from above calculate VL and rsL by using the M&M Model (with taxes) for Yancey using $8.0 Million Debt costing 8%.

Reference no: EM13291604

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