Ques-)
Total Capital Structure = $120m
- Preferred Stock = $10m
- Other Capital source = $29m
Common Stock Portion in Capital Structure= Total Capital Structure - Preferred Stock - Other Capital source
=$120m - $10m - $29m
= $81m
Weight of Common Stock Portion in Capital Structure= Common Stock/Total Capital Structure
= $81m/$120m
= 67.5%
Ques-)
EBIT = $103m
- Value of Levered Firm = EBIT(1-Tax rate)/Required Rate of Return
= $103m(1-0.21)/13.9%
= $ 585.40m
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