Question
You predict the following FCFE per share for Mackinac Co. FCFF1=2.8305 FCFF2=3.3117 FCFF3=3.8747 Mackinac's beta is 1.25. The government bond yield is 6 percent, and
You predict the following FCFE per share for Mackinac Co.
FCFF1=2.8305
FCFF2=3.3117
FCFF3=3.8747
Mackinac's beta is 1.25. The government bond yield is 6 percent, and the market equity risk premium is 5 percent. Use CAPM to compute the cost of equity. The company has no debt.
The long-term FCFF growth rate will start in year 4 and is estimated at 9%.
Compute the value of Mackinac's equity (firm) value. Round to the full number.
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Equity Asset Valuation
Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen
2nd Edition
470571439, 470571438, 9781118364123 , 978-0470571439
