Estimate? marpor value without leverage

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Marpor Industries has no debt and expects to generate free cash flows of $14 million each year. Marpor believes that if it permanently increases its level of debt to $27.83 ?million, the risk of financial distress may cause it to lose some customers and receive less favourable terms from its suppliers. As a? result, Marpor's expected free cash flows with debt will be only $13 million per year. Suppose? Marpor's tax rate is 22%?, the? risk-free rate is 3%?, the expected return of the market is 12%?, and the beta of? Marpor's free cash flows is 1.1 ?(with or without? leverage).

a. Estimate? Marpor's value without leverage.

b. Estimate? Marpor's value with the new leverage.

a. Estimate? Marpor's value without leverage. Marpor's value without leverage is ?$enter your response here million.  ?(Round to two decimal? places.)

b. Estimate? Marpor's value with the new leverage. ?Marpor's value with the new leverage is ?$enter your response here million. ? (Round to two decimal? places.)

Reference no: EM133110377

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