Question
I have been stuck on this question for days need help in the next 15 minutes Suppose Goodyear Tire and Rubber Company is considering divesting
I have been stuck on this question for days need help in the next 15 minutes
Suppose Goodyear Tire and Rubber Company is considering divesting one of its manufacturing plants. The plant is expected to generate free cash flows of $ $1.53 million peryear, growing at a rate of 22.3% per year. Goodyear has an equity cost of capital of 88.4%, a debt cost of capital of 6.8 %6.8%, a marginal corporate tax rate of 37%, and adebt-equity ratio of 2.8. If the plant has average risk and Goodyear plans to maintain a constantdebt-equity ratio, whatafter-tax amount must it receive for the plant for the divestiture to beprofitable? A divestiture would be profitable if Goodyear received more than $nothing million after tax.(Round to one decimalplace.)
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