This post addresses the leverage of Milton Industries.
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Milton Industries expects free cash flow of $5 million each year. Milton's corporate tax rate is 35%, and its unlevered cost of capital is 15%. The firm also has outstanding debt of $19.05 million, and it expects to maintain this level of debt permanently.
a) What is the value of Milton Ind. without leverege?
b) What is the value of Milton Ind. with leverage?
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The solution provides all calculations needed for both leverage questions for Milton Industries.
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a) What is the value of Milton Ind. without ...
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