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Please solve 1,2, and 3. Please show work. Thank you. 1. Lintel Corp, is expected to produce EBIT of $35,000, $45,000 and $65,000 in each
Please solve 1,2, and 3. Please show work. Thank you.
1. Lintel Corp, is expected to produce EBIT of $35,000, $45,000 and $65,000 in each of the next three years. Depreciation is estimated to be $4,200, $4,800 and $5,100 in each of the next three years. Capital expenditures are estimated to be $7,300, $9,200 and $10,300 in each of the next three years. Incremental increases in net operating working capital are estimated to be $4,200, $5,400 and $6,500 in each of the next three years. The firm's tax rate is 21%. Estimate the free cash flows for the firm for each of the next three years. I 2. Lintel's cost of capital is estimated to be 7.5%. Free cash flows beyond year 3 are estimated to grow at a 2% annual rate. Using this information, as well as that from problem 1, a) apply the growing perpetuity formula to estimate the terminal value for Lintel Inc., as of the end of year 3. The firm has $57,996 in outstanding debt at 6% interest. b) What is Lintel's estimated equity value? 3. Estimate Lintel's year 3 terminal value by applying an EV/EBITDA multiple of 11 times to year 3 EBITDA Step by Step Solution
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