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Information about Company A: Equity information: Equity beta = 1.4, T-bond rate 2.5%, market risk premium = 7%, # of shares outstanding = 15.5 millions

Information about Company A:

  • Equity information: Equity beta = 1.4, T-bond rate 2.5%, market risk premium = 7%, # of shares outstanding = 15.5 millions
  • Debt information: Bond YTM6.5%; Total market value of debt: $1.9 million
  • Tax rate = 21%
  • Capital structure: 40% debt, 60% equity
  • Current FCFF = $125 million. FCFF is expected to grow at 20%, 15%, and 10% for the next 3 years, then slow down to 5% indefinitelythereafter.

What is WACC, Firm Value, Equity Value, and Equity value per share for Company A?

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