FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

WACC will be the discount rate for your company valuation. Your company is financed with 40% debt and 60% equity. Beta is 2. Market risk

WACC will be the discount rate for your company valuation. Your company is financed with 40% debt and 60% equity. Beta is 2. Market risk premium is 5%. The risk-free rate is 1%. The after-tax cost of debt is 10%. Cash flows are 10 million dollars per year for the next 20 years. What is the company valuation in millions? If beta is higher while everything else is unchanged, the valuation is?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

CFIN

CFIN

Authors: Scott Besley, Eugene Brigham

5th edition

1305661656, 9781305888036 , 978-1305666870

More Books

Students also viewed these Finance questions

Question

★★★★★
There are four main types of risks: Supply risk, Operations risk, Demand risk, and Security risk. Provide an example of two of these risks, and what might be done to mitigate them.

Answered: 1 week ago

Question

★★★★★
=+they be included in the stock of money?

Answered: 1 week ago

Question

★★★★★
explain the main forms of individual recognition and reward specifically meritbased pay increments, merit bonuses, results-based individual incentive methods and non-cash rewards

Answered: 1 week ago

Question

★★★★★
Beate Klingenberg manages a Poughkeepsie, New York, movie theater complex called Cinema 8. Each of the eight auditoriums plays a different film; the schedule staggers starting times to avoid the...

Answered: 1 week ago

Question

★★★★★
Which of the following is NOT what venture capitalists offer to start-ups? money equity managerial advice key contacts in an industry

Answered: 1 week ago

Question

★★★★★
The income statement for Eideldown, Inc. is divided by its two product lines, blankets and pillows, as follows: Sales revenue Variable costs Contribution margin Fixed costs Operating income (loss)...

Answered: 1 week ago

Question

★★★★★
The terms "normal" and "inferior" are: Multiple choice question. the same for everyone, irrespective of income. used interchangeably. subjective to the incomes of people. based on the product sales...

Answered: 1 week ago

Question

★★★★★
A company wants to investigate if the average rating of consumers for a particular product is greater than 4.5 (on a scale of 1 to 10). They collect a random sample of 35 consumers and ask them to...

Answered: 1 week ago

Question

★★★★★
Q3. The number of days in succession that the probability professor gets to class on time can be represented by a random variable X with the pmf a. Find the value of k. b. Obtain the cdf of X. c....

Answered: 1 week ago

Question

★★★★★
Jason Company offered a contest in which the winner would receive P1,000,000 payable over twenty years. On December 31, 2019, Jason Company announced the winner of the contest and signed a note...

Answered: 1 week ago

Question

★★★★★
Time left 0:33:08 Valerie works as a salesperson for ABC Pharmaceuticals. She receives a commision of 6.8% on monthly sales up to $5392, 9% on the next $8017, and 14.3% on any additional sales during...

Answered: 1 week ago

Question

★★★★★
=+ b. David is trying to get a large advance to write a textbook. He knows, but publishers dont, that he did poorly on the writing portion of the SAT.

Answered: 1 week ago

Question

★★★★★
=+ a. Rick has gotten a large advance to write a textbook. With the money in hand, he prefers

Answered: 1 week ago

Question

★★★★★
=+spending his time sailing rather than sitting in his offi ce working on the book.

Answered: 1 week ago

Previous Question Next Question