What is the corporate tax rate

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Timpano Inc. can each period have good sales with 50% probability or bad sales with 50% probability. In case of good sales the unlevered cash flow will be $80 million, in case of bad sales the unlevered cash flow will be $50 million. The unlevered beta of the company is 1.5, the expected return of the market portfolio is 4% while the risk-free return is 1%. Timpano's equity market value is $850 million and its debt is kept constant at $950 million.

What is the corporate tax rate? (Assume that the firm's cash flow is perpetual).

Reference no: EM131182943

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