Answer:
hello your question is incomplete below is the missing part of the complete question
Firm A is currently 100% equity financed, and it has the following balance sheet:
Assets Debt
100,000 0 Equity
100,000
Answer : $170000
Explanation:
Value of equity/levered firm = $100000
Firm A project ( debt amount )= $50000
Tax rate = 40%
Determine the total value of firm A if it used equity to finance the project
= value of levered firm + debt amount + ( debt amount * tax )
= $100000 + $50000 + ( 50000 * 40 % )
= $170000
The total value of Firm A (value of assets) if it used equity to finance the project is $170,000.
Using this formula
Firm A Total value = Value of levered firm + Debt + ( Debt × tax rate)
Let plug in the formula
Firm A Total value = $100,000 + $50,000 + ($50,000× 40 % )
Firm A Total value =$100,000+$50,000+$20,000
Firm A Total value = $170,000
Inconclusion the total value of Firm A (value of assets) if it used equity to finance the project is $170,000.
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