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You want evaluate Firm A . You know the following data from Firm A balance sheet and income statement ( see image ) . You
You want evaluate Firm A You know the following data from Firm A balance sheet and income statement see image You make the following assumptions: You forecast that, in firm A will have an EBIT equal to times that of euros Accounts Receivables will remain equal to of Revenues from Sales Accounts Payables will remain equal to of Revenues from Sales Inventories will remain equal to of Revenues from Sales Corporate tax rate is Firm A will buy machinery worth e in The machinery will be fully depreciated between and in equal installments. Existing assets fully depreciate in Firm A is an all equity firm, its CAPM beta is the annual market return is and the risk free rate is Your task is as follows: Estimate the value of the firm at the end of using discounted cash flow analysis. Please note that there is no single best answer, but you will have to make additional assumptions about the evolution of income statement and balance sheet quantities. Note that the firm will not be liquidated at the end of but it is expected to stay in business for a very long period. Make the necessary assumptions Now imagine that by the end of Firm A will take out perpetual debt worth euros, with an annual coupon rate of As a result, the capital structure of the firm will be made of of equity and of debt and it is supposed to remain this way indefinitely. Does the value of Firm A at the end of change? If so why and how? Please try to solve this for me it would be greatly appreciated!
You want evaluate Firm A You know the following data from Firm A balance sheet and income statement see image
You make the following assumptions:
You forecast that, in firm A will have an EBIT equal to times that of euros
Accounts Receivables will remain equal to of Revenues from Sales
Accounts Payables will remain equal to of Revenues from Sales
Inventories will remain equal to of Revenues from Sales
Corporate tax rate is
Firm A will buy machinery worth e in The machinery will be fully depreciated between and in equal installments. Existing assets fully depreciate in
Firm A is an all equity firm, its CAPM beta is the annual market return is and the risk free rate is
Your task is as follows:
Estimate the value of the firm at the end of using discounted cash flow analysis.
Please note that there is no single best answer, but you will have to make additional assumptions about the evolution of income statement and balance sheet quantities.
Note that the firm will not be liquidated at the end of but it is expected to stay in business for a very long period. Make the necessary assumptions
Now imagine that by the end of Firm A will take out perpetual debt worth euros, with an annual coupon rate of As a result, the capital structure of the firm will be made of of equity and of debt and it is supposed to remain this way indefinitely. Does the value of Firm A at the end of change? If so why and how?
Please try to solve this for me it would be greatly appreciated!
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