Question
1. Suppose that XYZ Corp. will generate free-cash-flows (FCF) of $200 at the end of the year. XYZ has a cost of equity capital of
1. Suppose that XYZ Corp. will generate free-cash-flows (FCF) of $200 at the end of the year. XYZ has a cost of equity capital of 10%, a cost of debt capital of 5%, a market value debt-to-equity ratio of one, and faces a 21% tax rate. Assuming that XYZs FCF will grow by 3% per year in the future, what is the value of XYZ Corp? Round your final answer to two decimals?
2. Suppose that XYZ Corp. will generate free-cash-flows (FCF) of $200 at the end of the year. XYZ has a cost of equity capital of 10%, a cost of debt capital of 5%, a market value debt-to-equity ratio of one, and faces a 21% tax rate. Assuming that XYZs FCF will grow by 3% per year in the future, and XYZ Corp. has in debt with a market value of $2000, what is the value of XYZs Corp. equity? Round your final answer to two decimals?
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Risk Management And Financial Institutions
Authors: John C. Hull
3rd Edition
1118269039, 9781118269039
