Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Winston's Super Market is currently an all equity firm.... Please solve this financial accounting problem
Transcribed Image Text:Winston's Super Market is currently an all-equity firm
that has 120,000 shares of stock outstanding at a
market price of $34.50 a share. The current cost of
equity is 11% and the tax rate is 35%. Winston's is
considering adding $1.6 million of debt with a
coupon rate of 7.5% to the capital structure. The debt
will be sold at par value.
What is the levered value of the equity?
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