What is the total value of the company

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Question - McAwesome owns 3 restaurants. Each has a debt/equity of 40% and makes interest payments of $29,500 a the end of the year. The cost for levered equity is 19%. Each store estimates that annual sales will be $1 million; cost of goods sold will be $450,000 and general and admin costs will be $325,000. These cash flows are expected to remain constant. The corporate tax rate is 40%.

a. Use the flow to equity approach to determine the value of equity.

b. What is the total value of the company?

Reference no: EM132910373

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