Question
Last year, CKS had sales of $8b, EBIT of $60m, Net Working Capital of $120m, and capital expenditures matching its depreciation. The year before that,
Last year, CKS had sales of $8b, EBIT of $60m, Net Working Capital of $120m, and capital expenditures matching its depreciation. The year before that, CKSs Net Working Capital was $108m. CKS has 60m shares outstanding, its effective tax rate is 20% and its debt ratio is 30%. Investors require a 5% (unadjusted) yield on the debt and 10% return on equity.The discount rate for the FCFF model is [x]%. (Provide your answer in percent, rounded to two decimals, omitting the % sign.) The share price estimate, if CKS will continue to operate infinitely with a constant free cash flow to the firm growth rate of 6%, is [y]. Calculate and provide the values for [x] and [y]. Show are calculations steps and formulae.
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