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6. (5) You have collected the following information. The estimated free cash flows to firm (FCFF) for each of the next three years are estimated
6. (5) You have collected the following information. The estimated free cash flows to firm (FCFF) for each of the next three years are estimated as $1520 million, $2200 million, $4800 million from year 1 to year 3. Subsequent to year 3, you estimate that free cash flows will grow at 2.0% indefinitely. Currently, the company has debt outstanding $2 million and interest expense $100 thousands. Company's current debt-to-firm value ratio is 25%. You estimate that the unlevered cost of capitalis 10%. Assume the company's tax rate is 20% which will remain for the foreseeable future. Using the adjusted present value method (APV) to compute the unlevered value of the firm. Iffirm changes its level of debt conditional on the value of the firm, what is the levered firm value
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