Question
. Proust Company has FCFF of $1.7 billion and FCFE of $1.3 billion. Prousts WACC is 11 percent, and its required rate of return for
. Proust Company has FCFF of $1.7 billion and FCFE of $1.3 billion. Prousts WACC is 11 percent, and its required rate of return for equity is 13 percent. FCFF is expected to grow forever at 7 percent, and FCFE is expected to grow forever at 7.5 percent. Proust has debt outstanding of $15 billion.
A. What is the total value of Prousts equity using the FCFF valuation approach?
B. What is the total value of Prousts equity using the FCFE valuation approach?
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Financial Management Principles And Practice
Authors: Timothy Gallagher
6th Edition
1930789157, 978-1930789159
