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PSK Enterprises is tempted to acquire the BSM Corporation, which is a privately held, and in the same line of business as Sangria. Like Sangria,
PSK Enterprises is tempted to acquire the BSM Corporation, which is a privately held, and in the same line of business as Sangria. Like Sangria, its debt capacity is of firm value. BSM Corporation generated $ million in the last year. It has a cost of debt of and the cost of equity is Currently BSM Corporation has $ million of gross fixed assets and the accumulated depreciation is $ million. BSMs current working capital is $ million. It is expected that the BSM will grow at a longterm rate after the sixth year. Other assumptions are given in the table below. Based on this information and assumptions, what is your estimate of the BSM Corporations enterprise value? What are the values of debt and equity?
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