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Value of debt-bluegrass mint company

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Bluegrass Mint Company has a debt-equity ratio of 0.32. The required return on the company's unlevered equity is 13.5% and the pretax cost of the firm's debt is 5.7%. Sales revenue for the company is expected to remain stable indefinitely at last year's level of $17,957,604.9. Variable costs amount to 57% of sales. The tax rate is 34% and the company distributes all its earnings as dividends at the end of each year.

What would be the value of debt?

HINT: Use the WACC to compute the value of the company and then determine the amount of debt

NOTE: Enter the number rounding to four DECIMALS. If your decimal answer is 0.034576, your answer must be 0.0346. DO NOT USE the % sign

Reference no: EM133062536

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