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What is the firm weighted average cost of capital

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Reference no: EM133087832

Question - The free cash flows of MN Company are expected to be $24 million per year for ever. This firm has a permanent debt of $74 million, and an unlevered cost of capital of 10%. The corporate tax rate is 30%.

What is value of the unlevered company?

What is MN's cost of equity if the cost of debt is 6%?

What is the firm's weighted average cost of capital (WACC)?

Using the WACC method, what is the value of MN's equity?

What is the total value of the company?

Using the adjusted present value method, calculate the effect of leverage on the total value of the firm?

Reference no: EM133087832

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