Compute the total market value, the stock market

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Question: The Malock Company has net operating earnings (f $l0 million and $20 mil- lion cf debt with a 7 percent interest charge. In all cases, assume no taxes.

a. Using the net operating income approach and an overall capitalization rate cf 1] percent, compute the total market value, the stock market value. and the implied required return on equity for the Malock Com- pany prior to the sale of additional debt.

b. Determine the answers to part a if the company were to sell the addi- tional $10 million in debt.

Reference no: EM133335886

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