Question
Construct the relevant aspects of financial statements for the following firm: Its operations last for 5 years. It has capital expenses of $100 for three
Construct the relevant aspects of financial statements for the following firm:
Its operations last for 5 years.
It has capital expenses of $100 for three years.
It follows two-year linear depreciation.
It has revenues that start at $100 in the first year and grow by 30% each year.
It is purely equity financed.
Its corporate income tax rate is 40%.
Customers always pay the year after they have received the product.
What is the firms NPV if the CoC is 15% per year?
What is the same (a) firms and (b) equitys NPV if it borrows $200, pays $20 in interest every year, and pays back the $200 principal in the final year?
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