Question
CNT Ltd is a telecommunication company. In 2018, the company plans to expand its business into transport industry by adding a transport division. The new
CNT Ltd is a telecommunication company. In 2018, the company plans to expand its business into transport industry by adding a transport division. The new division will be financed in the same way as CNT. Which of the following methods is the most appropriate to value this project?
Select one:
a.
Discount the division FCF at a benchmark WACC, which reflects the business risk of the division only.
b.
Discount the division FCF at CNTs levered cost of equity
c.
Discount the division FCF at CNTs unlevered cost of equity
d.
Discount the division FCF at a benchmark WACC, which reflects both the business risk and the financial risk of the division.
e.
Discount the division FCF at CNTs existing after-tax WAC
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