Ethyl Corporation is a chemical manufacturing company which reported earnings before interest and taxes of $ 150 million this year. The firm has a cost of capital of 10%, a tax rate of 40% and expects earnings to grow 5% a year in perpetuity. You know that the firm has no working capital requirements but does have net capital expenditures that it needs to make to grow. The firm has a return on capital of 12.5% that it expects to maintain in perpetuity.

Estimate the value of the firm.

Answer rating: 100% (QA)

Given EBIT 150 million cost of capital i 10 tax rate t 40 growth rate g ... View the full answer