LSI recently issued $195,000 of perpetual 9% debt and used the cash to do a stock repurchase.

Question:

LSI recently issued $195,000 of perpetual 9% debt and used the cash to do a stock repurchase. Earnings for LSI are anticipated to be $83,000 annually before interest and taxes. The company has a payout of 100% of earnings and its unlevered is 15%. Corporate taxes for LSI are 40%.
a) What is the unlevered value of LSI??
b) What is the value of the levered firm using the adjusted PV method?
c) What are an investor?
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