You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions...
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You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future Investments in new plant and working capital: Year bints 2 3 Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation $87 $107 $122 $127 17 27 32 37 Pretax profit 70 80 90 90 Tax at 30% 21 24 27 27 Investment 16 19 22 24 eBook From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 18%, its debt yields 9%, and it pays corporate tax at 30% Piet References a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. a. Total value b. Laputa's equity You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future Investments in new plant and working capital: Year bints 2 3 Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation $87 $107 $122 $127 17 27 32 37 Pretax profit 70 80 90 90 Tax at 30% 21 24 27 27 Investment 16 19 22 24 eBook From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 18%, its debt yields 9%, and it pays corporate tax at 30% Piet References a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. a. Total value b. Laputa's equity
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