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please show work thank you! 9. Stark Corporation reported EBITDA of $1290 million in 2021 and depreciation charges of $400 million. The firm expects revenues,
please show work thank you!
9. Stark Corporation reported EBITDA of $1290 million in 2021 and depreciation charges of $400 million. The firm expects revenues, earnings, capital expenditures, net working capital, and depreciation to grow at 9.5% a year from 2022 to 2026, after which the firm's cash flows will grow with 2% growth rate indefinitely. Capital Expenditures are estimated to be $493m in 2022 and working capital will be $90 million. The tax rate for the firm is 21%. The firm has debt outstanding trading at a market value of $3.2 billion, and yielding a pre-tax debt interest rate of 8%. There were 62 million shares outstanding, trading at $64 per share, and the most recent beta is 1.10 . The treasury bond rate is 3.5% and the market risk premium 6%. The company also plans to lower its debt/equity ratio to 50% for the steady state (which will result in the pre-tax debt interest rate dropping to 7.5%.) A. Estimate the value of the firm. B. Estimate the value of the equity in the firm and the value per shareStep by Step Solution
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