Determine the value without leverage

Reference no: EM1353586

Milton Industries expects free cash flow of $5 million each year. Milton'scorporate tax rate is 35%, and its unlevered cost of capital 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: EM1353586

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