The consultant company Maggi is hired to value the company Bolli. Bolli expects Earnings before interest and taxes to be 400 million in 2023. Its expected that the company is growing 2.25% yearly and accomplishes 9% return on invested capital. Boll is 100% financed with cash and the cost of equity is 10%

a) what is Bolli´s investment rate.

b) What is the value of the company in 2020(after one year)

c) The consulting firm says that the growth is going to be higher than 2.25% and its more likely to be 4.5%, what is the company´s value in 2020 using the new information.

d) Explain the difference in value(company´s worth) in question b and c.

e) The consulting firm says that an investment rate of 20% and 3% growth should be used for Bolli. What will Bolli´s value be in 2020 based on the investment rate and growth %. Explain the result with max 3 lines.

Answer rating: 100% (QA)

a Bollis investment rate its return on invested capital ie 9 bValue of the company after one yearVal... View the full answer