Company A unlevered value is $100 million. The tax rate is 30%. The debt cost of capital is 3% and the asset cost of capital is 6%. i. What is company A’s value if debt/assets is raised to 25% after a leveraged recapitalization. Assume debt is permanent.
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Company A unlevered value is $100 million. The tax rate is 30%. The debt cost of
capital is 3% and the asset cost of capital is 6%.
i. What is company A’s value if debt/assets is raised to 25% after a
leveraged recapitalization. Assume debt is permanent.
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