What is the levered value of the equity

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Reference no: EM131979009

Question: Hanover Tech is currently an all equity firm that has 200,000 shares of stock outstanding with a market price of $30.00 a share. The current cost of equity is 23 percent and the tax rate is 21 percent. The firm is considering permanently adding $3,300,000 of debt with a coupon rate of 5 percent to its capital structure. The debt will be sold at par value. What is the levered value of the equity?

Round your answer to the nearest whole dollar, but don't include the $ sign.

HINT: First get the value of the unlevered firm. Then calculate the value of the levered firm. The total value of any firm is the value of the debt plus the value of the equity.

Reference no: EM131979009

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