Bluegrass Mint Company has a debt-equity ratio of .30. Therequired return on the company’s unlevered equity is 13.2 percentand the pretax cost of the firm’s debt is 7 percent. Sales revenuefor the company is expected to remain stable indefinitely at lastyear’s level of $20,100,000. Variable costs amount to 70 percent ofsales. The tax rate is 25 percent and the company distributes allits earnings as dividends at the end of each year.

  

a.	If the company were financed entirely by equity, how much wouldit be worth? (Do not round intermediate calculations andenter your answer in dollars, not millions of dollars, rounded to 2decimal places, e.g., 1,234,567.89)
b.	What is the required return on the firm’s levered equity?(Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g.,32.16.)
c-1.	Use the weighted average cost of capital method to calculatethe value of the company. (Do not roundintermediate calculations and enter your answer in dollars, notmillions of dollars, rounded to 2 decimal places, e.g.,1,234,567.89)
c-2.	What is the value of the company’s equity? (Do notround intermediate calculations and enter your answer in dollars,not millions of dollars, rounded to 2 decimal places, e.g.,1,234,567.89)
c-3.	What is the value of the company’s debt? (Do not roundintermediate calculations and enter your answer in dollars, notmillions of dollars, rounded to 2 decimal places, e.g.,1,234,567.89)
d.	Use the flow to equity method to calculate the value of thecompany’s equity. (Do not round intermediate calculationsand enter your answer in dollars, not millions of dollars, roundedto 2 decimal places, e.g., 1,234,567.89)

	a. Value of the company b. Required return % c-1. Value of the company c-2. Value of equity c-3. Value of debt d. Value of equity