Question 8b: Use the below information to value a levered company with constant annual perpetual cash flows from assets. The next cash flow will be generated in on year from now, so a perpetuity can be used to value this firm. Both the operating free cash flow (OFCF) and cash flow from assets (CFFA) are constant (but not equal to each other). Data on a Levered Firm with Perpetual Cash Flows Item Abbreviation Value Operating Free Cash Flow OFCF $108m Cash flow from assets including interest tax shields CFFAL (levered) $112.5m Growth rate of cash flow from assets, levered and unlevered g 2.5% WACCBefore Tax 10% Weighted average cost of capital before tax Weighted average cost of capital after tax Cost of debt WACCAfter Tax 9.7% rD 5% TEL 11.25% Cost of levered equity Debt to assets ratio, where the asset value includes tax shields D/VL 20% Number of shares n 100m Corporate tax rate tc 30% What is the firm's current share price? Select one: O a. $15 O b. $12.625 O c. $12.6 d. $12 0 e. $11.4 Question 8b: Use the below information to value a levered company with constant annual perpetual cash flows from assets. The next cash flow will be generated in on year from now, so a perpetuity can be used to value this firm. Both the operating free cash flow (OFCF) and cash flow from assets (CFFA) are constant (but not equal to each other). Data on a Levered Firm with Perpetual Cash Flows Item Abbreviation Value Operating Free Cash Flow OFCF $108m Cash flow from assets including interest tax shields CFFAL (levered) $112.5m Growth rate of cash flow from assets, levered and unlevered g 2.5% WACCBefore Tax 10% Weighted average cost of capital before tax Weighted average cost of capital after tax Cost of debt WACCAfter Tax 9.7% rD 5% TEL 11.25% Cost of levered equity Debt to assets ratio, where the asset value includes tax shields D/VL 20% Number of shares n 100m Corporate tax rate tc 30% What is the firm's current share price? Select one: O a. $15 O b. $12.625 O c. $12.6 d. $12 0 e. $11.4