What is unlevered value

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Nadia Corporation adjusts its debt so that its interest coverage (EBIT/Interest) remains constant at 3. Nadia's EBIT next period is projected to be $15 million and this is expected to grow at 3.5% annually. Nadia expects its incremental capital expenditure in future (net of depreciation) to equal 1% of EBIT every year. Its investment in incremental net working capital is expected to be 1% of EBIT every year and it faces 40% tax rate. Answer must be rounded up to two decimal places.

-If the unlevered cost of capital for Nadia is 8%, what is its unlevered value?

-What is the levered value of Nadia?

-If Nadia's cost of debt is 6% how much debt should it have to begin with?

Reference no: EM133073142

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