This problem uses the information from Problem 9-4 about Canton Corporation to estimate the firms enterprise value
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Question:
This problem uses the information from Problem 9-4 about Canton Corporation to estimate the firm’s enterprise value using the APV model.
a. What is the firm’s unlevered cost of equity? (Hint: The firm’s debt beta is .20)
b. What are the unlevered FCFs for Canton for years 1 through 4? (Hint: The unlevered FCFs are the same as the firm FCFs.)
c. What are the interest tax savings for Canton for years 1 through 4?
d. Based on your estimate of enterprise value, what is the value per share of equity for the firm if the firm has 2 million shares outstanding? Remember that your calculations up to this point have been in thousands of dollars.
Related Book For
Introduction to Financial Accounting
ISBN: 978-0133251036
11th edition
Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick
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