Question
(a) An analyst has determined the following estimates for next year for Kappa Ltd. Net income=$150m, depreciation=$12m; capital expenditure=$30m; additional working capital requirements=$6m; interest expenses=$10m;
(a) An analyst has determined the following estimates for next year for Kappa Ltd. Net income=$150m, depreciation=$12m; capital expenditure=$30m; additional working capital requirements=$6m; interest expenses=$10m; tax rate=35%. Free cash flow is expected to grow indefinitely at 8% per annum. The firms Weighted average cost of capital is 8%, the market value of its debt is $1 billion and it has 15 million shares outstanding. (i) What is the value of the firm? (ii) What is the value of equity in the
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International Financial Management
Authors: Jeff Madura
3rd Edition
0314862722, 978-0314862723
