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A private firm has equity of 4000 and debt of 1000 (book values) and a FCFF of 100. The risk premium is 6%, the risk-free
A private firm has equity of 4000 and debt of 1000 (book values) and a FCFF of 100. The risk premium is 6%, the risk-free rate 3% and the corporate tax rate 30%. Cost of debt is 4% and the expected growth rate of FCFF is 2% forever. The firm operates in a sector with an unlevered beta of 0.5. Assume that the book and market values of debt are the same.
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Equity Asset Valuation
Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen
2nd Edition
470571439, 470571438, 9781118364123 , 978-0470571439
