Your firm expects to have EBIT of $ 3,000 every year into perpetuity. Your firm's depreciation is

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Your firm expects to have EBIT of $ 3,000 every year into perpetuity. Your firm's depreciation is expected to be the same as its capital expenditures every year, and there are no expected changes to its net working capital going forward. The discount rate on its free cash flows is 8.4% and the corporate tax rate is 22.9%.

a. What is the enterprise value of your firm?

b. If your firm has no debt in its capital structure, what is the value of your firm's equity? Assume no excess cash.

c. If your firm has perpetual debt of $ 23,000, what is the value of the equity?

Related Book For answer-question

Corporate Finance Core Principles And Applications

ISBN: 9781260571127

6th Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

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Posted Date: Apr 09, 2024 01:26 PM

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Your firm expects to have EBIT of $ 3,000 every year into perpetuity. Your firm's depreciation is

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Heres how to calculate the answers for each scenario a Enterprise Value EV Calculate Unlevered F... View the full answer

Corporate Finance Core Principles And Applications

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