Capital structure fm illustration 10... why they taken 1750 as both market value of equity and value of unlevered firm .

Sai · 4 Mar 2024

Kel = Keu + D/E * (Keu-kd) (1-t) 0.20 + 275/1557.5 * (0.20-0.15) * (1-0.30) 0.20 + 0.0088 * 0.7 0.20 + 0.00617 0.20617 or 20.62%

Keerthana · 4 Mar 2024

Computation of cost of equity part in the same question of illustration 10 fm capital structure

Keerthana · 4 Mar 2024

Thank you

Sai · 4 Mar 2024

Levered firm means market value of equity plus market value of debt Whereas Unlevered firm means only equity component... There is not debt component in Unlevered firm Therefore, Unlevered firm = Market value of equity