Question
. The douglas Company has Sales of 200 million USD, COGs of 110 million USD, SGA of 10 million USD. Current capital expenditure is 20
. The douglas Company has Sales of 200 million USD, COGs of 110 million USD, SGA of 10 million USD. Current capital expenditure is 20 million USD. Depreciation of 20 million, change in net working capital of 8 Million and interest rate expenses yearly of 6 million. The company has 100 million of Debt outstanding, and a 20% tax rate. Determine the current FCFF and FCFE. If the WACC is 10%, and the cost of equity is 17.4%, what is the Value of the equity, using the free cash flow method, if FCFF grows at 3% in perpetuity? Now, using the free cash flow to equity approach, determine the value of the equity if FCFE grows at 4% in perpetuity.
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