24. In the following year, WuXi Biologics expects to generate $ 269 million in free cash...
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24. In the following year, WuXi Biologics expects to generate $ 269 million in free cash flow, which is projected to rise at a pace of 37% every year afterward. WuXi Biologics has a 100 percent equity cost of capital, an 87 percent debt cost of capital, and a corporation tax rate of 35 percent. Assume WuXi Biologics' debt-to-equity ratio is currently 0.05. Required: a) What is the value of WuXi Biologics as an all-equity firm? (5 marks) b) What is the value of WuXi Biologics as a levered firm? (5 marks) c) What is the value of WuXi Biologics' interest tax shield? (2 marks) 24. In the following year, WuXi Biologics expects to generate $ 269 million in free cash flow, which is projected to rise at a pace of 37% every year afterward. WuXi Biologics has a 100 percent equity cost of capital, an 87 percent debt cost of capital, and a corporation tax rate of 35 percent. Assume WuXi Biologics' debt-to-equity ratio is currently 0.05. Required: a) What is the value of WuXi Biologics as an all-equity firm? (5 marks) b) What is the value of WuXi Biologics as a levered firm? (5 marks) c) What is the value of WuXi Biologics' interest tax shield? (2 marks)
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a Value of WuXi Biologics as an AllEquity Firm Value of AllEquity Firm 2691037 ... View the full answer
Related Book For
Fundamentals of Investment Management
ISBN: 978-0078034626
10th edition
Authors: Geoffrey Hirt, Stanley Block
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