BUSI 408 March 30 - Cost of Equity = Rf + B MP = 9% + 1.1 *...

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BUSI 408 March 30 15:11 1. sales growth 2% 2. Net Working Capital 25% of sales FCF(free cash flow)= EBIT(1-T) +DEP –INC NWC – CAPEX  Economic reality  EBIT=earnings before interest tax FCF does not depend on how much debt you have Cost of debt after tax = 10% * 60% = 6%
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Unformatted text preview: Cost of Equity = Rf + B MP = 9% + 1.1 * (6%) = 15.6% Assume MP = 6% D= 200 + 400= 600 Wd=50% E=20* 30 =600 We = 50% WACC = 6% * 50% + 15.6% * 50%= 10.8% 15:11 15:11...
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BUSI 408 March 30 - Cost of Equity = Rf + B MP = 9% + 1.1 *...

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