Question
First, you are to create the necessary Financial Statements for a fictional corporation. Second, you are to calculate the CFFA for this corporation (there is
First, you are to create the necessary Financial Statements for a fictional corporation. Second, you are to calculate the CFFA for this corporation (there is no need on this question to go into detail explaining/teaching CFFA, simply work through the exercise showing your calculations. Assume the growth rate in CFFA is constant at a rate of 5%. Also, assume that the company is financed 50% with debt and 50% with equity. The corporations equity is currently trading at $75 per share with D_0=$4.25 and the growth rate in the dividends is 3%. The corporations marginal tax rate is 32.5%. Third, you are to estimate the value of this firm.
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