You are analyzing a valuation done on a stable firm by a well-known analyst. Based on the

Question:

You are analyzing a valuation done on a stable firm by a well-known analyst. Based on the expected FCFF next year of $30 million, and an expected growth rate of 5%, the analyst has estimated a value of $750 million. However, he has made the mistake of using the book values of debt and equity in his calculation. Although you do not know the book value weights he used, you know that the firm has a of 12% and an after-tax of 6%. You also know that the market value of equity is three times the book value of equity, and the market value of debt is equal to the book value of debt.
Estimate the correct value for the firm.
Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...