Weikopf AG, a subsidiary company of Denkel, expects annual free cash flows until infinity of 50 million

Weißkopf AG, a subsidiary company of Denkel, expects annual free cash flows until infinity of 50 million USD. Weißkopf has a debt-to-equity ratio of 1:2 and a levered beta of 1.3. The risk-free interest rate is 4% and the market risk premium is 10%. Debt is considered to be risk-free.

Question) What is the value of Weißkopf by considering corporate taxes and applying the WACC approach? Due to what concept did the value change? Briefly explain the concept.

Answer rating: 100% (QA)

To calculate the value of Weikopf AG we need to use the WACC weighted average cost of capital approa... View the full answer