1. Compute the enterprise value and the value of the equity of the company using the APV...
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1. Compute the enterprise value and the value of the equity of the company using the APV method. To do so, use your projections of free cash flows in the first three years and the one of the fourth year to estimate the terminal value. You can assume cash flows will grow at a 1% constant rate from 2025 onwards. The cost of debt is 4%. The tax rate is 30%. Assume the interest tax shields can be discounted at the unlevered cost of capital.
2. Compute the enterprise value and the value of the equity of the comapany using the WACC method, based on the assumption of a constant target Debt/Assets of 20%
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Answer Question 1 The enterprise value and the value of the equity of the company can be computed using the APV method To compute the value we need to ... View the full answer
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