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A company has the following characteristics Cost of equity: 1 4 % Cost of debt ( before tax ) : 1 0 % Debt to

A company has the following characteristics
Cost of equity: 14%
Cost of debt (before tax): 10%
Debt to Equity ratio: 0.75
Tax rate: 20%
Its most recent operating profit (EBIT) was $5 million and is expected to grow at 15% per
year for the medium-term.
It also had the following relevant items for the most recent results and its medium-term
growth rates.
Depreciation was $100,000 and is expected to grow at 10% per year.
Increase in net working capital (NWC) was $75,000 and is expected to grow at 20%
per year.
Capital Expenditures (CAPEX) was $200,000 and is expected to grow at 15% per year.
After 5 years, the Adjusted Cash Flows From Assets are expected to grow at a constant rate
of 2%, stretching until infinity.
Derive the WACC of the firm
Create a table of the Adjusted Cash Flows From Assets (CFFA) for the first 5 years
Derive the value of the overall firm
Break down the value of the overall firm into debt and equity value
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