Calculate wacc and determine the value of the firm

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Question - You're the CFO at Ingenuity Corp. and have been asked by your CEO to value the company.  Ingenuity Corp. currently has EBIT of $250 million per year, and the EBIT is expected to continue growing at 8% per year for the next five years and 4% thereafter. The Company has 100 million common shares outstanding, currently selling for $25 per share.  The firm's debt is publicly traded and was recently quoted at 95 percent of face value.  It has a total face value of $1.5 billion, and it is currently priced to yield 13 percent.  The risk-free rate is 5 percent, and the market risk premium is 4.5 percent.  You've estimated that Ingenuity has a beta of 0.85. The company's tax rate is 40%. Depreciation is 14.5% of EBIT, changes in NWC is 11% of EBIT and capital expenditures are 20% of EBIT. Calculate WACC and determine the value of the firm.

Reference no: EM133091488

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