lalalooowt
lalalooowt
15.05.2021 • 
Business

A firm has unlevered beta of 1.1, and now its debt to equity ratio is 0.4. What is the levered beta assuming the tax rate is 40%? Using WACC to discount free cash flows, one gets the value of the firm. True or False?

Suppose beta is 1.2, risk free rate is 3%, market risk premium is 5%, before tax cost of debt is 6%, tax rate is 40%, and the firm's debt to equity ratio is 0.5, what is WACC?

a. A firm has EBIT of 100 million, depreciation of 15 million, tax rate of 40%, change in net working capital of 3 million, and capital expenditure of 20 million, what is the free cash flow?
b. Suppose this free cash flow grows at 3% per year forever, and the WACC is 8%, what is the firm value?
c. If this firm has outstanding debt of 150 million, what is the equity value of the firm?
d. Suppose a firm has free cash flow of equity 100 million per year indefinitely, and its cost of equity is 10%, what is the equity value of this firm?
e. If this firm has outstanding debt of 250 million, what is the firm value?

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