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The Anderson Door Co. earned $30 million before interest and taxes on revenues of $80 million last year. Capital expenditures were $20 million, and depreciation
The Anderson Door Co. earned $30 million before interest and taxes on revenues of $80 million last year. Capital expenditures were $20 million, and depreciation was $15 million. The additions to working capital were $6 million. Anderson is currently operating at their target debt ratio of 25 percent, and their tax rate is 40 percent. The shareholders require return of 15 percent on their investment, the firms cost of debt is 8 percent, and the expected growth rate in firm cash flows is 5 percent. The market value of debt is $25 million. Calculate the value of the firm and the value of the firms equity
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