You have been tasked with using the FCF model to value Julie's Jewelry Co. After your...
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You have been tasked with using the FCF model to value Julie's Jewelry Co. After your initial review, you find that Julie's has a reported equity beta of 1.4, a debt-to-equity ratio of 5, and a tax rate of 21 percent. In addition, market conditions suggest a risk-free rate of 2 percent and a market risk premium of 8 percent. If Julie's had FCF last year of $42.5 million and has current debt outstanding of $110 million, find the value of Julie's equity assuming a 2.5 percent growth rate in FCF. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) You have been tasked with using the FCF model to value Julie's Jewelry Co. After your initial review, you find that Julie's has a reported equity beta of 1.4, a debt-to-equity ratio of 5, and a tax rate of 21 percent. In addition, market conditions suggest a risk-free rate of 2 percent and a market risk premium of 8 percent. If Julie's had FCF last year of $42.5 million and has current debt outstanding of $110 million, find the value of Julie's equity assuming a 2.5 percent growth rate in FCF. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
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The task is to use the Free Cash Flow to Equity FCFE model to value Julies Jewelry Co Lets step through the solution First we need to calculate the co... View the full answer
Related Book For
Fundamentals of Investments, Valuation and Management
ISBN: 978-1259720697
8th edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
Posted Date:
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