Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 29, 2024

AutoMotors Company has a FCF of $6 million today and this is expected to grow at a constant rate of 5% per year. The beta

AutoMotors Company has a FCF of $6 million today and this is expected to grow at a constant rate of 5% per year. The beta is 1.4 and the company has $15 million in debt. They have 4 million shares and the debt represents 35% of capital. The interest rate on their debt is 7% and the tax rate is 25%. The risk free rate is 3% and the market return is 9%.
What is the value of AutoMotors company?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Of Financial Institutions

Authors: George H Hempel

1st Edition

0133159604, 9780133159608

More Books

Students also viewed these Finance questions

Question

★★★★★

How would a natural law theory be used to judge sexual behavior? Explain.

Answered: 1 week ago

Question

★★★★★

=+2.1. Define x V y = max{x, y), and for a collection {x } define V x = sup_ x _; define x Ay = min(x, y) and A x = inf. x .. Prove that LAUB = IA V. IB, TANB = IA AIB, IA = 1 -14, and LAB =|I - Il,...

Answered: 1 week ago

Question

★★★★★

In 2010, Elbert Corporation had net cash provided by operating activities of $531,000; net cash used by investing activities of $963,000; and net cash provided by financing activities of $585,000. At...

Answered: 1 week ago

Question

★★★★★

Question 2 You have $1,000 to invest at an APR of 6.0%. using the Rule of 72, about how long will it take this investment to double? Click to open: None of the answers here are correct. about 6 years...

Answered: 1 week ago

Question

★★★★★

Find the derivative of y with respect to x, given y sin 1 (4 + 3x)

Answered: 1 week ago

Question

★★★★★

An ABDE metal pipe is kept in balance by a DF cable as well as by two ball joints in A and E. A load of 800N (vertical) is applied in C. a) What is the moment of force associated with the load of 800...

Answered: 1 week ago

Question

★★★★★

Q1. Gourmet has PKR150 million in sales revenue with PKR90 million in cost of goods sold. It has selling and administrative expenses of PKR10, pays annual taxes in the amount of PKR10 and has...

Answered: 1 week ago

Question

★★★★★

Imagine you head a large agency such as the Department of Education (DoE). Based on your experience with the CITI certification process and your class readings, outline a protocol for approving...

Answered: 1 week ago

Question

★★★★★

Using the P-O-L-C Framework, answer the following questios: 600 wrds.. Take one item from each section that you could relate to you and discuss how you could use in your life right now.and write the...

Answered: 1 week ago

Question

★★★★★

Fig. H 4.39 Determine the forces bars 1, 2 and 3 of the plane truss loaded and supported (Ans. S S2 S3=-30 a/2h) as shown in Fig. I. = C aaaaaa B aga Fig. 1 Q

Answered: 1 week ago

Question

★★★★★

h. How has your family status changed through the generations? Compare your family experience with those of your classmates. Did most immigrants come for the same reasons? What are the differences in...

Answered: 1 week ago

Question

★★★★★

c. Describe how you felt after the encounter, and explain why you think you felt as you did.

Answered: 1 week ago

Question

★★★★★

1. Identify four early foci in the development of intercultural communication.

Answered: 1 week ago

Previous Question Next Question