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Can someone please help me with these questions. Thanks in advance HeadAche Inc. depends on two sources of financing: bond issues and common stock. Ir
Can someone please help me with these questions. Thanks in advance
HeadAche Inc. depends on two sources of financing: bond issues and common stock. Ir the following table, you can see the market value of these two sources as well as requi rates of return: Market Value Required Return Bonds $480,000,000 8.00% Common stock $720,000,000 12.00% Total $1,200,000,000 Other financial information: Net income available to common shareholders $105,600,000 Interest expenses $60,000,000 Depreciation $38,400,000 Investment in fixed capital $67,200,000 Investment in working capital $19,200,000 Net borrowing $24,000,000 Tax rate 30% Stable growth rate of FCFF 2% Stable growth rate of FCFE 2.5% 1) Using FCFF, what is the present value of the firm, and the present value of the equity? 2) Using FCFE, what is the present value of the equity
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