Calculate the value of the firm

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Question: VOLAI Corp has an operating profit of $300,000, interest of $35,000, dividends of $6000. There are 400 outstanding common stocks and a tax rate of 40 percent. The firm has an after-tax cost of debt of 5 percent and a cost of equity of 15 percent. The firm's target capital structure is set at a mix of 40 percent debt and 60 percent equity. Assuming this as the optimum capital structure, calculate the value of the firm.

Reference no: EM132959698

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