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Work out with details,Thanks! Grumman Corporation, a producer of military aircraft, reported net income of exist120 million in 2013, after paying interest expenses of exist19
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Grumman Corporation, a producer of military aircraft, reported net income of exist120 million in 2013, after paying interest expenses of exist19 million. The depreciation allowance in 2013 was exist77 million, while capital expenditures amounted to exist80 million in the same year. Working capital increased by exist15 million in 2013. (The tax rate is 40%) Grumman finances 10% of its net capital investment and working capital needs using debt. The free cash flows to equity are expected to grow 10% a year from 2014 to 2018, and 6% a year after that. The stock had a beta of 0.80, and this is expected to remain unchanged. The treasury bond rate is 7%. ERP of 5.5%. A. Estimate the Price/FCFE ratio for the firm. B. Grumman has exist251 million in debt outstanding at the end of 1993. What is the Value/FCFF ratio? the Value/EBITDA ratio? Why are they different from the Price/FCFE ratio? Grumman Corporation, a producer of military aircraft, reported net income of exist120 million in 2013, after paying interest expenses of exist19 million. The depreciation allowance in 2013 was exist77 million, while capital expenditures amounted to exist80 million in the same year. Working capital increased by exist15 million in 2013. (The tax rate is 40%) Grumman finances 10% of its net capital investment and working capital needs using debt. The free cash flows to equity are expected to grow 10% a year from 2014 to 2018, and 6% a year after that. The stock had a beta of 0.80, and this is expected to remain unchanged. The treasury bond rate is 7%. ERP of 5.5%. A. Estimate the Price/FCFE ratio for the firm. B. Grumman has exist251 million in debt outstanding at the end of 1993. What is the Value/FCFF ratio? the Value/EBITDA ratio? Why are they different from the Price/FCFE ratio
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