Proust Company has FCFF of $ 1.7 billion and FCFE of $ 1.3 billion. Prousts WACC is
Question:
Proust Company has FCFF of $ 1.7 billion and FCFE of $ 1.3 billion. Proust’s WACC is 11 percent, and its required rate of return for equity is 13 percent. FCFF is expected to grow forever at 7 percent, and FCFE is expected to grow forever at 7.5 percent. Proust has debt outstanding of $ 15 billion.
A. What is the total value of Proust’s equity using the FCFF valuation approach?
B. What is the total value of Proust ’ s equity using the FCFE valuation approach?
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A The firm value is the present value of FCFF discounted at the WACC or The market value ...View the full answer
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Related Book For 
Equity Asset Valuation
ISBN: 978-0470571439
2nd Edition
Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen
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