Question: Square is evaluating how to finance their new project. Square expects to receive operating cash flow of $ 2000 and tax rate is 40%.

Square is evaluating how to finance their new project. Square expects to

Square is evaluating how to finance their new project. Square expects to receive operating cash flow of $ 2000 and tax rate is 40%. When unleveraged, Square will have 14% cost of capital. As leveraged firm, Square will issue $ 2500 debt with 8% interest rate. a. What is the value of Square as unleveraged firm? b. What is value of the firm as leveraged firm?

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