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Imagine a firm with the first year FCF of $10M. This firm's capital structure is as follows: Moreover, it has 200,000 bonds outstanding with the
Imagine a firm with the first year FCF of $10M. This firm's capital structure is as follows: Moreover, it has 200,000 bonds outstanding with the price of $550 and the YTM of 6.0%. The firm has 7M shares outstanding with a market price of $42.50 per share. The cost of equity is 10.8% and the corporate tax rate is 30%. If the PV of interest tax shield is $11.3M, what is the FCF growth rate? (Note: All answers are rounded) \begin{tabular}{|l|} \hline 2.51% \\ \hline 2.70% \\ \hline 2.80% \\ \hline 2.92% \\ \hline 2.61% \\ \hline \end{tabular}
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