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Milano Pizza Club owns a chain of three identical...




Milano Pizza Club owns a chain of three identical restaurants for their Milan style pizza. Each store has $270,000 in debt outstanding and a debt-to-equity ratio of 30 percent. The prevailing market interest rate is 9.5 percent. An equivalent all-equity financed store would have a discount rate of 15 percent. For each store, the estimated annual sales are $1,000,000, costs of goods sold are $400,000, and overhead costs are $300,000. Each of these cash flow streams is assumed to be a perpetuity. The corporate tax rate is 40 percent. Using the FTE approach, what is the value of Milano?s Pizza Club?


Paper#7310 | Written in 18-Jul-2015

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