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NAKODIA Inc. is considering the acquisition of KOLA Enterprises. You have been assigned to value KOLA. You have made the following projections for KOLA for
NAKODIA Inc. is considering the acquisition of KOLA Enterprises. You have been assigned to value KOLA. You have made the following projections for KOLA for years 1-5 ($ millions): Year1 Year2 Year3 Year4 Year5 EBIT 20 22 25 26 30 Depreciation 5 5 6 7 8 Capital Expenditures 10 10 15 15 15 4 Investment in Working Capital 3 4 3 4 Assume a tax rate of 34%, a WACC of 13%, 2 million shares outstanding, $30 million debt value, and a growth rate of 5% after year 5. Using the Discounted Cash Flow methodology, with the perpetual growth model for calculating the terminal value, the per share intrinsic value of KOLA's stock is closest to [Note: Ignore cash for this problem.] $19.9 A. $34.5 B. c. OC. $26.15 $62.4 D
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