Consider the following information for Giant Corp.
UCFAT is a level perpetuity.
Firm Value= $ 100m
Present value of tax benefits =20 million.
Amount of debt= unknown.
Interest rate on debt=10%
Unlevered cost of Equity = 20%
Depreciation= $ 1 million per year.
New Equipment= 1 million per year.
UCFAT is unlevered cash flow after tax
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Part 1
Use 99 if the answer is indeterminate
a) WACC of the firm is ____ % enter your response here (Round to two decimals)
b) Tax Rate is ____ % enter your response here (Round to two decimals)
