Question: An unlevered firm (Firm U) which has EBIT of $2m/year in perpetuity Key Formulas Free Cash Flow = EBIT (1-T) – (Change in NOWC+ Change in NFA) WACC = (D/V) (RD * (1 – T)) + (S/V) (RS) ; V = D + S    Value of debt tax shields (assuming perpetual debt) = PV

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