growth rate of this FCF is 6.5%. Yancey has no debt in its current capital structure. Its Cost of Equity is 11.5%. Its tax rate is 35%. (Hint use Equations 26-16 and 26-17 from the textbook.)
find out the Unlevered Value of Yancey (Vu).
find out VL and rsL for the scenario whereby Yancey uses $8.0 Million Debt costing 8%.
Using the Unlevered Value from above find out VL and rsL by using the M&M Model (with taxes) for Yancey using $8.0 Million Debt costing 8%.