What is the total value of milano pizza

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Problem 1: Milano Pizza Owns 4 identical restaurants popular for specialty pizza. Each restaurant has a debt-equity ratio of 40% and makes interest payments of $41,000 at the end of each year. The cost of the firm's levered equity is 19%. Each store estimates that annual sales will be $1.3 million: annual cost of goods sold will be $670,000 and annual overhead costs will be $405,000. There cash flows are expected to continue forever. The combined federal and state tax rate is 40%. Use the FTE (Flow to Equity) approach to determine the value of the company's equity. (remember cash flows are for each store, to get company wide cash flow, multiply by 4). What is the total value of Milano Pizza?

Reference no: EM132933344

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