Question
Acme Storage has a market capitalization of $178 million, and debt outstanding of $114 million. Acme plans to maintain this samedebt-equity ratio in the future.
Acme Storage has a market capitalization of $178 million, and debt outstanding of $114 million. Acme plans to maintain this samedebt-equity ratio in the future. The firm pays an interest of 8.2% on its debt and has a corporate tax rate of 21%.
a. If Acme's free cash flow is expected to be $20.44 million next year and is expected to grow at a rate of 5% per year, what is Acme's WACC?
b. What is the value of Acme's interest tax shield?
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Handbook Of Global Financial Markets
Authors: Sabri Boubaker, Duc Khuong Nguyen
1st Edition
9813236647, 978-9813236646
