On December 2020, the company Psi SA is financed with debt and equity. This company has a cost of capital (WACC) equal to 12%. Also on December 2020, the company presented an EBIT equal to 1,500€, 350€ of amortization and 150€ of depreciation, and 300€ of corporate taxes. The company invested in fixed assets for 500€, and its working capital increased in 50€. After a decade of rapid growth, the cash flows in the last two years increased only at a constant rate of 2%, and it is expected that the cash flows will remain growing at this level in the future. Determine the value of the firm on December 2020.
On December 2020, the company Psi SA is financed with debt and equity. This company has a cost of capital (WACC) equal to 12%. Also on December 2020, the company presented an EBIT equal to 1,500€, 350€ of amortization and 150€ of depreciation, and 300€ of corporate taxes. The company invested in fixed assets for 500€, and its working capital increased in 50€. After a decade of rapid growth, the cash flows in the last two years increased only at a constant rate of 2%, and it is expected that the cash flows will remain growing at this level in the future. Determine the value of the firm on December 2020.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On December 2020, the company Psi SA is financed with debt and equity. This company has a cost of capital (WACC) equal to 12%. Also on December 2020, the company presented an EBIT equal to 1,500€, 350€ of amortization and 150€ of depreciation, and 300€ of corporate taxes. The company invested in fixed assets for 500€, and its working capital increased in 50€. After a decade of rapid growth, the cash flows in the last two years increased only at a constant rate of 2%, and it is expected that the cash flows will remain growing at this level in the future. Determine the value of the firm on December 2020.
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