Equity financing at company operating capital cost

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Reference no: EM131888405

Melangkah Lagi is a company that uses 100% equity financing at a company's operating capital cost of 20%. The company's sales reach $ 1500 million per year. The variable cost of the company is 50%, while the fixed costs $ 250 million / year. To expand the business, Mr. Miko requires an additional and as much as $ 350 million, He intends to borrow funds in one of the bank with a 10% interest. How Much is the value of Mr. Miko's company after borrowing and what is the Debt-Equity Ratio of the company after having debt? (Assume 25% tax rate)

Notes: Melangkah lagi is an example of a firm.

Reference no: EM131888405

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