What is the value of glassmakers equity

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Reference no: EM13826075

Glassmakers has the below characteristics.

The premerger debt is $5, the premerger equity is $10. The risk free rate is 6%. The premerger beta is 1.36. The tax rate is 40%. The cost of debt premerger is 11%. The expected market rate of return is 10%.

The cash flows are: CF0 = 0; CF1 = 4,000,000; Nj = 3; CF2 = 19,000,000; I/YR = 11.29. What is the value of Glassmakers' equity? Value of equity=? (Round your answer to the closest thousand dollars.)

a) $16,019,000

b) $17,111,000

c) $18,916,000

d) $22,111,000

e) $22,916,000

Reference no: EM13826075

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