Question

Cello is a manufacturer of pianos. It earned an aftertax return on capital of 10% last year and expects to maintain this return next year. If the current year’s aftertax operating income is $100 million and the firm reinvests
50% of this income back, estimate the FCFF next year.
[Aftertax operating income = EBIT (1 − t)].


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  • CreatedApril 15, 2015
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