Question: hi how fo i solve this??? and this transaction will lower the rating to BB (with a cost of capital after the transaction, QUESTION 2

 hi how fo i solve this??? and this transaction will lower

hi how fo i solve this???

and this transaction will lower the rating to BB (with a cost of capital after the transaction, QUESTION 2 The Spanish company Visco Mac Group S.A. is a company that operates fast food restaurants and it is considering producing packaged food for sale at grocery stores. The initial investment in production facilities to start this venture will be Euro 60 million, depreciable straight line over 10 years to a salvage value of Euro 10 million. The packaged food business is expected to generate revenues of Euro 100 million each year for the next 10 years and the EBITDA margin (EBITDA/revenues) is expected be 15% on these revenues. The working capital is expected to be 10% of revenues, with the investment occurring at the start of each period, where needed. The cost of capital for Visco Mac is 12% but the cost of capital for other firms in the packaged food business is 99. The marginal tax rate is 40%. A. Estimate the NPV of the investment, to continue in perpetunity for woar 10

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!