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Taco Bell has expected sales of $10 billion in one-year, gross profits are 30% of revenues, depreciation of 10% of revenues, and its tax rate
Taco Bell has expected sales of $10 billion in one-year, gross profits are 30% of revenues, depreciation of 10% of revenues, and its tax rate is 20%. Suppose these revenues and costs will continue perpetually. If the cost of capital is 10%, compute the NPV of an investment by Bain Capital (a Private Equity Company) that proposes buying Taco Bell for $25 billion? What is the payback period for this investment?
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