Question
Use FCFF for the answer. Company VAC has 1,852,000 shares outstanding. The market value of debt is 3,192,000,000. The company's market weights are 25% debt
Use FCFF for the answer. Company VAC has 1,852,000 shares outstanding. The market value of debt is 3,192,000,000. The company's market weights are 25% debt and 75% equity. The company has a insignificant cash balance. The company has an effective tax rate of 40%.
FCFF is currently $1,115,900,000. This will grow at 8% for the next 3 years and then 4% forever.
The equity beta is 0.9, the equity risk premium is 5.5%, and the risk free rate is 5.0%.
Before tax debt is 7%.
What is the company's WACC? What is the total value of the firm? What is the intrinsic value per share?
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