Fredrickson corp has 10 million of 5 bonds outstanding, Financial Management

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Fredrickson corp has 10 million of 5 bonds outstanding

Fredrickson Corp. has $10 million of 5% bonds outstanding. Assume that all of the MM assumption is met, and the firm is subject to a 38% federal-plus-state corporate tax rate. The firm has an EBIT of $1.5 million, and the unlevered cost of equity is 8.7%. What is the implied value of Fredrickson's equity, in millions?

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Financial Management: Fredrickson corp has 10 million of 5 bonds outstanding

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