You are considering two identical firms, one levered and the other unlevered. Both firms have expected EBIT of $21000. The value of the unlevered firm (VU) is $120000. The corporate tax rate is 30%. The cost of debt is 9%, and the ratio of debt to equity is 1 for the levered firm. Use Modigliani and Miller's (1963) propositions in a world without bankruptcy, what is the value of the levered firm?
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
Get Answers For Free
Most questions answered within 1 hours.