Problem $18-16$ APV, FTE, and WACC

Bluegrass Mint Company has a debt$-$equity ratio of $\mathrm{.}35.$ The required return on the company$$s unlevered equity is $12\mathrm{.}1$ percent$$and the pretax cost of the firm$$s debt is $5\mathrm{.}9$ percent. Sales revenue for the company is expected to remain stable indefinitely at last year$$s level of $$19,000,000.$ Variable costs amount to $60$ percent of sales. The tax rate is $24$ percent$$and the company distributes all its earnings as dividends at the end of each year.

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a$.$ If the company were financed entirely by equity, how much would it be worth? $($Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded$$to $2$ decimal places, e$.$g$.,1,234,567\mathrm{.}89)$

b$.$What is the required return on the firm$$s levered equity? $($Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

c$-1.$Use the weighted average cost of capital method to calculate the value of the company. $($Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded$$to $2$ decimal places, e$.$g$.,1,234,567\mathrm{.}89$

$)$c$-2.$What is the value of the company$$s equity? $($Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded$$to $2$ decimal places, e$.$g$.,1,234,567\mathrm{.}89)$

c$-3.$What is the value of the company$$s debt? $($Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded$$to $2$ decimal places, e$.$g$.,1,234,567\mathrm{.}89)$

d$.$Use the flow to equity method to calculate the value of the company$$s equity. $($Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded$$to $2$ decimal places, e$.$g$.,1,234,567\mathrm{.}89)$