Pompeii Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt-equity ratio of 30 percent and makes interest payments of $60,000 at the end of each year. The cost of the firm's levered equity is 17 percent. Each store estimates that annual sales will be $1.545 million; annual cost of goods sold will be $835,000; and annual general and administrative costs will be $495,000. These cash flows are expected to remain the same forever. The corporate tax rate is 23 percent.

**a.**Use the flow to equity approach to determine 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., 1,234,567.89)**

**b.**What is the total 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., 1,234,567.89)**

#### Top Answer

a. Value of the Company's equity... View the full answer