For this and the next question (Assume earnings growth): Aon Electronics has EBIT of $200,000, a growth

Question:

For this and the next question (Assume earnings growth): Aon Electronics has EBIT of $200,000, a growth rate of 6%, and faces a tax rate of 40%. In order to support growth, Aon must reinvest 20% of its EBIT in net operating assets. The firm has $300,000 in 8% debt outstanding. A similar company with no debt has a of 11% (i.e. rEU = 11%). According to the MM extension with growth, what is the unlevered value of the firm? [To help you correctly answer this question, please note that FCF = $80,000].

Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...