What is the value of lovefinderrz with debt

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Reference no: EM132696712

Love Finderrz with two "R's" and a "Z" - is a firm that runs a matchmaking app of the same name. The same really dumb, really forgettable name. Like a really dumb, uncreative, super sweaty name. expects to earn pre-tax operating income of $10.73 billion each year going forward in perpetuity. The firm has an unlevered cost of capital of 11.4% per annum and is expected to continue to pay corporate tax at a rate of 40.0% for the forseeable future. also has $74.31 billion of interest-only debt outstanding that currently trades at par. This level of debt financing, which the firm intends to maintain permanently, attracts no costs of financial distress. exists in a world where the only capital market imperfection is the presence of corporate taxes.

Question 1: What is the value of LoveFinderrz if it had no debt (i.e. its unlevered firm value)?

Question 2: What is the value of LoveFinderrz with debt (i.e. its levered firm value)?

Question 3: What is the market value of LoveFinderrz' equity?

Question 4: What is the Weighted Average Cost of Capital (i.e. WACC) for LoveFinderrz?

Reference no: EM132696712

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