Question

Cell Phone is a cellular firm that reported net income of $50 million in the most recent financial year. The firm had
$1 billion in debt, on which it reported interest expenses of $100 million in the most recent financial year. The firm had depreciation of $100 million for the year, and capital expenditures were 200% of depreciation. The firm has a cost of capital of 11%. Assuming that there is no working capital requirement, and a constant growth rate of 4% in perpetuity, estimate the value of the firm.


$1.99
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  • CreatedApril 15, 2015
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