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this ques is based on company valuation. I need correct answer with explanation and well stepped. ( please show working note also) don't worry about
this ques is based on company valuation. I need correct answer with explanation and well stepped. ( please show working note also) don't worry about like. thank you:)
I don't know how to handle this Accounting question and need guidance. Golden Eye Co., a hi-tech satellite company, has asked you to value the company for possible cross-listing in the U.S. The company has estimated revenues, earnings before interest and taxes, change in net working capital, and net capital expenditures (defined as Capex - depreciation) for the next three years (see Exhibit 1 below.) The free cash flow in year 4 is estimated to be $250 million and is expected to grow at 4% forever. The tax rate for similar firms is 36%. The average unlevered beta of comparable firms is 1.90. Golden Eye Co. has just borrowed $1 billion of long-term debt at 9% interest rate. It will repay $200 million per year in the first three years, and then will maintain the debt at $400 million forever. If the risk-free rate is 6% and the market risk premium is 5.5%, what is the market value of equity of Golden Eye Co.? (6 pts.) Exhibit 1: Year T=1 T=2 T=3 Revenues 6,6197,4178,564 EBIT 540 680 750 Net capex 150 170 190 Change in WC70 75 80 Requirements: It need calculations to prove answersStep by Step Solution
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