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Use the below information to value a levered company with annual perpetual cash flows from assets that grow. The next cash flow will be generated
Use the below information to value a levered company with annual perpetual cash flows from assets that grow. The next cash flow will be generated in one year from now. Data on a Levered Firm with Perpetual Cash Flows Value Item full name $6.2 Item abbreviation OFCF (millions) g ID PEL E/V tc 2% pa 3% pa 9.5% pa 60% pa Operating free cash flow Growth rate of OFCF Cost of debt Cost of levered equity Equity to assets ratio, where the asset value includes tax shields Corporate tax rate 30% The current value of levered equity is a. 113.94 b. 54.63 O c. 31.35 O d. 156.25 e. 81.94
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