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An analyst has given you the following forecast for RIMMIE, a retail store chain: Year 1 Year 2 Year 3 Year 4 Year 5 EBIT
An analyst has given you the following forecast for RIMMIE, a retail store chain:
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
EBIT | 2000 | 2200 | 2240 | 2260 | 2480 |
Depreciation | 400 | 400 | 450 | 450 | 470 |
Capital expenditures | 800 | 300 | 1100 | 840 | 830 |
Noncash working capital | 400 | 440 | 448 | 452 | 496 |
Noncash working capital at the end of year 0 was equal to 430. The company has a WACC of 8% and its tax rate is 40%. The long-term growth rate in FCFF is expected to be 3%. Interest-bearing debt at the end of year 0 equals 5000. Estimate the equity value of RIMMIE.
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