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Unlevered value of the company-levered brothers inc

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Levered Brothers, Inc. has a debt/equity ratio, D/E (in market value terms), of one. The equity has a beta of one, and the market risk premium, over and above the risk-free rate, is 9%. The corporate tax rate for the company, TC , is 40%. The company is expected to generate annual free cash flows of $215 million, every year indefinitely. The current weighted average cost of capital for the company is 15%.

What would be the unlevered value of the company, Vu, (i.e. the value of the company if the company is 100% equity financed)?

Reference no: EM132694580

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