Espinosa decides to forecast FCFE for the year 2013. She uses the same expectations derived in Example

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Espinosa decides to forecast FCFE for the year 2013. She uses the same expectations derived in Example 9. Additionally, she expects the following:

• the profit margin will remain at 8 percent (= 240/3,000), and

• the company will finance incremental fixed and working capital investments with 50 percent debt—the target DR. Espinosa’s forecast for 2013 is as follows (dollars in millions):

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Equity Asset Valuation

ISBN: 9781119850519

3rd Edition

Authors: Jerald E Pinto, CFA Institute

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