Bruin Industries has a target debt to equity ratio of 0.72. It can issue perpetual debt at 8%. The company expects to ge

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Bruin Industries has a target debt to equity ratio of 0.72. It
can issue perpetual debt at 8%. The company expects to generate
$123,000 of earnings before interest and taxes in perpetuity. The
company distributes all its earnings as dividends at the end of
each year. The firm’s unlevered cost of capital is 14%, and the
corporate tax rate is 40%. Assume the risk free rate is 4%, market
return is 9%, and the beta of debt is 0.8. Answer the
following:


What is the value of the company as an unlevered firm?
What is the required return on levered equity?