How much is the value of equity

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General electric wants to find the value of a japanese firm. pro-forma income statement is given below: (all yen figures below are in millions) Revenue Y 100 Costs Y(76) Depreciation Y(4) Interest Y(1) Pre-tax Y 19 After tax Y 11.40 it is expected that these cashflows will occur in perpetuity. further, the depreciation amount will equal the capital expenditures throughout in the future. unlevered cost of equity is 20% (in Yens). interest rate on debt is 10% (in Yens).

1. How much is the value of equity?

2. How much is the value of debt?

3. How much is the levered cost of equity (in Yens)?

4. How much is the WACC (in Yens)?

5. Assume a different capital structure with a larger debt amount, say 10 million Yens more than the amount assumed above. the firm value will increase by what amount?

Reference no: EM131501161

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