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Good Times The Best of Times Corp. wants to expand its party stores to Bithlo. In order to establish an immediate presence in the area,
Good Times The Best of Times Corp. wants to expand its party stores to Bithlo. In order to establish an immediate presence in the area, the firm is considering purchasing the privately held Cryfrown Badsad Mortuary Services Company. Cryfrown had cash flows of $4.3 million last year (y0), and these cash flows are expected to grow at 6.2% for the next five years, with growth leveling off to 3% thereafter. They have $23 million in debt outstanding, and 4.2 million shares. What is the most Good Times The Best of Times Corp. should pay for the mortuary company? Assume a WACC of 10%. |
What is the company's pretax cost of debt? |
If the tax rate is 35 percent, what is the aftertax cost of debt? |
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