A joint venture consortium is formed today (on date 0) as a stand-alone company. The...
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A joint venture consortium is formed today (on date 0) as a stand-alone company. The company will be liquidated after one year (on date 1) with expected financials on date 1 as shown below: Revenue Cost of Goods Depreciation $ 800 Million ($ 500) Million ($ 100) Million Operating Income $ 200 million Tax rate is 40%. Cost of unlevered equity is 15%. a) Find the value of equity today in an unlevered company. b) Find the value of levered equity today, in presence of $ 100 million of debt @ 10%
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