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Analysts expect Blitz Breweries to generate $1.495 billion of free cash flow at the end of the current year. (Assume that cash flows occur on
Analysts expect Blitz Breweries to generate $1.495 billion of free cash flow at the end of the current year. (Assume that cash flows occur on December 31 and today is January 1.) Analysts expect Blitz's free cash flow to grow at 2.5% in perpetuity. Blitz has debt-to-equity ratio of 1 and is committed to maintaining that ratio in perpetuity. Blitz's cost of debt is 596. Sudds Inc., a competing brewing company, has no debt and its shareholders require a return of 9%. The tax rate is 30%. Blitz's shareholders require a return of 13% and the company's WACC is 8.25%. What is the value of Blitz (vu)? Express your answer in billions of dollars. V = $
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