Milton Industries expects free cash flows of $14 million each year. Milton's corporate tax rate is 21%, and its unlevered cost of capital is 15%. Milton also has outstanding debt of $23.44 million, and it expects to maintain this level of debt permanently. a) What is the value of Milton Industries without leverage? b) What is the value of Milton Industries with leverage?

(A) $93.33 million

(B) $98.25 million

Explanation:

Milton expects a free cash flow of $14 million each year

The corporate tax rate is 21%

The unlevered cost of capital is 15%

Milton has an outstanding debt of $23.44 million.

(A) The value of Milton's industry without leverage can be calculated as follows

= Free cash flow/unlevered cost of capital

= $14 million/15%

= $14 million/0.15

= $93.33 million

(B) The value of Milton with leverage can be calculated as follows

= unlevered value + tax rate × debt

= $93.33 million + 21% × $23.44 million

= $93.33 million + 0.21 × $23.44 million

= $93.33 million + $4.922 million

= $98.25 million

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi