You are valuing a company using a discounted unlevered free cash flow approach. The firm has...
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You are valuing a company using a discounted unlevered free cash flow approach. The firm has a 5.0% pre tax cost of debt and a 26.0% tax rate. As of your valuation date, the yield on a 20 year US treasury bond is 2.90%, the firm has a beta of 1.40 and the expected equity market risk premium is 5.25%. The firm has $125 million in debt and a $300 million market value of equity. What discount rate should you use to value the firm's expected future unlevered cash flows? You are valuing a company using a discounted unlevered free cash flow approach. The firm has a 5.0% pre tax cost of debt and a 26.0% tax rate. As of your valuation date, the yield on a 20 year US treasury bond is 2.90%, the firm has a beta of 1.40 and the expected equity market risk premium is 5.25%. The firm has $125 million in debt and a $300 million market value of equity. What discount rate should you use to value the firm's expected future unlevered cash flows?
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Answer rating: 100% (QA)
To calculate the discount rate using the unlevered free cash flow approach we need to use the Weight... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1118845899
3rd edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
Posted Date:
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