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Megas produces giros and stuffed grape leaves. It has the following capital structure. Its debt is $ 6 0 m and its equity is $

Megas produces giros and stuffed grape leaves. It has the following capital structure. Its debt is $60m and its equity is $40M. Its risk free rate is 3%, while the expected return of the market is 10%, and its beta is 1.2. Megas intends to invest $500 m into a giro project wanting to become the biggest seller in the American continent. Thus, it expects to receive $200m (EBIT(1-1)) annually for 20 years on this investment. The depreciation is straight line for 20 years (based on the $500m investment. For the grape leaves project, Megas will invest $1 billion and receive $200m annually, in terms of both operating profit after tax plus depreciation. Compute the value of Megas.-- with all formulas

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