Question
The following is a five year forecast for Tinto Wholesale Spice: ($ millions Year 1 2 3 4 5 Free equity cash flow $132 $158
The following is a five year forecast for Tinto Wholesale Spice:
| ($ millions | Year |
| 1 | 2 | 3 | 4 | 5 | |
| Free equity cash flow | $132 | $158 | $190 | $228 | $274 |
The CFO estimates the company will grow at the industry growth rate of 5 percent after the fifth year, into
perpetuity. She has collected market data that indicates the current Treasury bill rate is 3 percent, the
market risk premium is 5 percent, and the beta of Tinto is 0.90.
What is the value of Tinto's common equity?
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Banking And Beyond The Evolution Of Financing Along Traditional And Alternative Avenues
Authors: Caterina Cruciani, Gloria Gardenal , Elisa Cavezzali
1st Edition
3030457516,3030457524
