fcffvsfcfe - Inputs Earningsbeforeinterestandtaxes= 100

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Inputs Earnings before interest and taxes = 100 Expected growth for next 5 years = 10% Expected growth after year 5 = 5% Tax rate = 40% Debt ratio for the firm = 20% Cost of equity = 12% Pre-tax cost of debt = 7% Return on capital in high growth= 12% Return on capital in stable growth = 10% 0 1 2 3 4 5 Terminal Year Expected Growth rate 10% 10% 10% 10% 10% 5% Reinvestment rate 83.33% 83.33% 83.33% 83.33% 83.33% 50.0% EBIT  $100.00   $110.00   $121.00   $133.10   $146.41   $161.05   $169.10  Taxes  $44.00   $48.40   $53.24   $58.56   $64.42   $67.64  EBIT(1-t)  $66.00   $72.60   $79.86   $87.85   $96.63   $101.46   - Reinvestment  $55.00   $60.50   $66.55   $73.21   $80.53   $50.73  FCFF  $11.00   $12.10   $13.31   $14.64   $16.11   $50.73  Terminal Value  $932.56  Present Value  $9.96   $9.92   $9.88   $9.84   $577.40  Value of Firm =  $617.01   $670.42  728.3140022 791.0399841 858.9835584
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This note was uploaded on 01/29/2012 for the course FIN 6000 taught by Professor Banko during the Fall '11 term at University of Florida.

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