Please help me with a breakdown of how this would be calculated:
Rotek has a capital structure of $300,000 in equity and $300,000 in perpetual debt. The firm's cost of equity is 14% and its cost of debt is 9 percent. If the firm has an expected perpetual net operating income of $120,000 and a marginal tax rate of 40%, what is the market value of RoTek? Assume all net income is paid out as dividends.
Equity in capital structure=$300,000
Debt in capital structure=$300,000
This solution is comprised of a detailed explanation of how to determine market value of a firm given its capital structure.