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Assume 4% risk free rate and 7% market risk premium.

Consider a company that reported an EBIT of $40 million last year, which is net of a depreciation expense of $4 million. The company made $5 million in capital expenditures and increased net working capital by $3 million. The company has an equity beta of 1.4, a debt-to-equity ratio of 0.3, and a tax rate of 30%. Assume the FCF is expected to grow at a rate of 3% into perpetuity. What is the value of the firm?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92879076

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