Question
The following is your company's capital structure & other financial information: Long-term debt: $400,000 @ 15% interest rate (before tax) Equity: $600,000 Tax Rate: 40%
The following is your company's capital structure & other financial information:
Long-term debt: $400,000 @ 15% interest rate (before tax)
Equity: $600,000
Tax Rate: 40%
Beta of the Co. 1.5
The current yield rate of the 10-year Treasury Bond is 5%
Normal Risk Premium is 10%
50. It is assumed that this company will stop its growth in 10 years. When it happens, its annual return is estimated to be $28,400. If it sells to other company at that time, how much should it ask for (not now, but when it stops growing)? Provide your answer in the nearest dollar. Please do not put "," or "$" in your answer. Put the numbers only.
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