question4

question4 - WACC for Wd=30.4% WACC = Wd (1-T)rd + We(Re) =...

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Based on the Base Case scenario presented on exhibit 8, and your assessment of optimal amount of debt to be used in Seagate capital structure, how much are Seagate’s operating assets worth? Answer the question assuming that that the buyout team plans to maintain its debt at a constant percentage of the firm’s market value. With a BBB rating, Seagate's optimal amount of debt to be used is 30.4% of the Market Capitalization. Using the Base Case presented in Exhibit 8 and assessment of optimal amount of debt, Seagates's operating assets are estimated to be:
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Unformatted text preview: WACC for Wd=30.4% WACC = Wd (1-T)rd + We(Re) = 30.4%(1-.34)6.8% +29.4(12.8%) = 5.12% NPOAT = EBIT (1-T) = 141,000,000(.34) = 93,060,000 V= 93,060,000/.0512 = $1,817,578,125...
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