London Corporation is expected have EBIT of $3,500,000 this year. London Corporation is in the 30%...

 

  

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London Corporation is expected have EBIT of $3,500,000 this year. London Corporation is in the 30% tax bracket, will report $1,400,000 in depreciation, will make $1,200,000 in capital expenditures, and will have no change in net working capital this year. The appropriate market capitalization rate for the unleveraged cash flow is 12% per year, and the firm currently has debt of $4,500,000 outstanding. London Corporation expects that their free cashflow will grow by 6% per year forever. What is London's FCFF? Use the free cash flow approach to value the firm's equity. London Corporation is expected have EBIT of $3,500,000 this year. London Corporation is in the 30% tax bracket, will report $1,400,000 in depreciation, will make $1,200,000 in capital expenditures, and will have no change in net working capital this year. The appropriate market capitalization rate for the unleveraged cash flow is 12% per year, and the firm currently has debt of $4,500,000 outstanding. London Corporation expects that their free cashflow will grow by 6% per year forever. What is London's FCFF? Use the free cash flow approach to value the firm's equity.

Answer rating: 100% (QA)

Calculate London Corporations Free Cash Flow to the Firm FCFF FCFF EBIT1 Tax Rate Depr... View the full answer