Calculate the value of the alpha company with the cash flow

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Question 1: Calculate the value of the Alpha company with the cash flow discount method. This company is listed on the Stock Exchange and presents the following information:

EBIT=20

INTEREST=-5

EBT= 15

TAXES (40%)= -6

NET INCOME=9

The firm distributes all of the profits as dividends and invests the total depreciation in fixed assets. You have a debt of $ 100 at an interest rate kd = 5% (the debt is considered risk free). Information corresponding to the capital market: e = 1.2 rf = 5% rm = 12% You should value the business by the four traditional cash flow discounting methods (ECF, FCF, CCF, and APV), assuming MM's propositions with taxes are met. Also perform an equivalence test of the methods.

Reference no: EM132614935

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