Determine the value with leverage

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Reference no: EM1353616

Milton Industries expects free cash flow of $5 million each year. Milton's corporate tax rate is 35%, and its unlevered cost of captial is 15%. The firm also has outstanding debt of $19.05 million, and it expects to maintain this level of debt permanently.

a. What is the value of Milton Industries without leverage?

b. What is the value of Milton Industries with leverage?

Reference no: EM1353616

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