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i need silving this problem please. Cagiati Enterprises has FCFF of 700 million Swiss francs (CHF) and FCFE of CHF 620 million. Cagiati's before-tax cost
i need silving this problem please.
Cagiati Enterprises has FCFF of 700 million Swiss francs (CHF) and FCFE of CHF 620 million. Cagiati's before-tax cost of debt is 5.7%, and its required rate of return for equity is 11.8%. The company expects a target capital structure consisting of 20% debt financing and 80% equity financing. The tax rate is 33.33%, and FCFF is expected to grow forever at 5%. Cagiati Enterprises has debt outstanding with a market value of CHF 2.2 billion and has 200 million outstanding common shares. - What FCFE growth rate would lead to the same equity value for both the FCFF and the FCFE models Step by Step Solution
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