Question: The following information is required to work Problems 23-1 through 23-3. Bremer Corporation is interested in acquiring Quantix Corporation. Quantix has 1 million shares outstanding

The following information is required to work Problems 23-1 through 23-3. Bremer Corporation is interested in acquiring Quantix Corporation. Quantix has 1 million shares outstanding and a target capital structure consisting of 30% debt. Quantix's debt interest rate is 7%. Assume that the risk-free rate of interest is 4% and that the market risk premium is 5%. Both Quantix and Bremer face a 30% tax rate. Valuation Quantix's free cash flow ( FC1 ) is $2.6 million per year and is expected to grow at a constant rate of 5% a year; its beta is 1.2 . What is the value of Quantix's operations? If Quantix has $12 million in debt, what is the current value of Quantix's stock? (Hint: Use the corporate valuation model of Chapter 22.) Vcsc=5Price=5miltion/share

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