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What is the value of purp with? leverage

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Reference no: EM133306293

Question

Purple? (PURP) expects free cash flow of 5 million each year. Its corporate tax rate is 21%?, and its unlevered cost of capital is 13% . It also has outstanding debt of ?$25.83million, and it expects to maintain this level of debt permanently. The only friction is Corporate Taxes.

a. What is the value of PURP without?leverage?

b. What is the value of PURP with? leverage?

Reference no: EM133306293

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