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# Milano Pizza Club owns three identical restaurants popular for their specialty pizzas Each restaurant has a debtAfcA1A1equity ratio of 35 percent and makes interest payments of \$42000 at

Milano Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debtAf?cA????1A????1equity ratio of 35 percent and makes interest payments of \$42,000 at the end of each year. The cost of the firmAf?cA????1A????1s levered equity is 18 percent. Each store estimates that annual sales will be \$1.32 million; annual cost of goods sold will be \$680,000; and annual general and administrative costs will be \$415,000. These cash flows are expected to remain the same forever. The corporate tax rate is 35 percent.

a.

Use the flow to equity approach to determine the value of the companyAf?cA????1A????1s equity. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Value of the companyAf?cA????1A????1s equity \$

b.

What is the total value of the company? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Value of the company \$

May 14 2020 View more View Less