Reference no: EM133069781

Question - Marpor Industries has no debt and expects to generate free cash flows of $16 million each year. Not yet answered Marpor believes that if it permanently increases its level of debt to $40 million, the risk Marked out of of financial distress may cause it to lose some customers and receive less favorable terms from 20.00 its suppliers. As a result, Marpor's expected free cash flows with debt will be only $15 million Flag per year. question Suppose Marpor's tax rate is 35%, the risk-free rate is 5%, the expected return of the market is 15%, and the beta of Marpor's free cash flows is 1.10 (with or without leverage). Estimate Marpor's value with the new leverage.