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12) No-Vaccines-Please (NVP) is a producer of cloth masks. Its free cash flow projections for the next two years are given below. Year 1 10,000

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12) No-Vaccines-Please (NVP) is a producer of cloth masks. Its free cash flow projections for the next two years are given below. Year 1 10,000 Year 2 12,000 Free Cash Flow After Year 2, NVP will continue growing at a constant rate of 2% (per year). The firm's tax rate is 30%. You can assume the firm will maintain a debt-equity ratio of 1 (which means its Equity/Value and Debt/Value ratios equal 0.5). The risk-free rate is 2%, and the market risk premium is 5%. a. Compute NVP's cost of equity. You should assume here that NVP's equity beta equals 1.6. b. Compute NVP's weighted average cost of capital. You should assume here that NVP's pre-tax cost of debt is 5%. c. Compute the terminal value of NVP's FCF in year 2 (i.e., the value in year 2 of all free cash flows occurring after year 2). d. Compute the total value of NVP (debt + equity). e. Compute the value of NVP's equity. You can assume here NVP has 80,000 of debt

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