capital structure - finding the value of leveraged and unleveraged firms w taxes

[helloatlas]

It is given in CFAI that Value of an unleveraged firm is ewuals to [EBT(1-t)]/WACC
Does it mean that Value of unleveraged firm is [EBIT(1-t)]/WACC?
Both assumes perpetual cash flows
Thanks

 

[clangerh]

Yes, I believe so. If there’s no leverage, there’s no interest payment, I. So EBIT = EBT. Also, WACC is weighted at 100% equity, so WACC = cost of equity. And it looks like the cash flows here are perpetual and stable (i.e., not growing).

 

[helloatlas]

My thoughts exactly. Thanks for reaffirming