Question
Consider the following forecasts for 2015-2019 of the Future Cash Flows, EBITDA and Future Interest Tax Shield for Firm X if the expansion were not
Consider the following forecasts for 2015-2019 of the Future Cash Flows, EBITDA and Future Interest Tax Shield for Firm X if the expansion were not to occur. Assume that the EBITDA Multiple is 5.0.
Assume a discount factor of 10% for the Free Cash Flows and the Continuation Value, and 7% for the Interest Tax Shield.
| Firm Value | 2015 | 2016 | 2017 | 2018 | 2019 |
| Free Cash Flow of Firm | 3,638 | 6,862 | 7,116 | 7,373 | 7,629 |
| EBITDA |
|
|
|
| 20,044 |
| Interest Tax Shield | 28 | 28 | 28 | 28 | 28 |
What is the Present Value (at December 2014) of the Interest Tax Shield forecast of Firm X if the firm where not to do the expansion?
| a)85
| ||
| b)95
| ||
| c)105
| ||
| d) | 115 |
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Numerical Methods In Finance
Authors: René Carmona, Pierre Del Moral, Peng Hu, Nadia Oudjane
2012th Edition
3642257453, 978-3642257452
