Divestiture would be profitable if goodyear received

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Reference no: EM131849255

Suppose Goodyear Tire and Rubber Company is considering divesting one of its manufacturing plants. The plant is expected to generate free cash flows of $1.63 million per? year, growing at a rate of 2.5% per year. Goodyear has an equity cost of capital of 8.7%?, a debt cost of capital of 6.8%?, a marginal corporate tax rate of 35%?, and a? debt-equity ratio of 2.7. If the plant has average risk and Goodyear plans to maintain a constant? debt-equity ratio, what? after-tax amount must it receive for the plant for the divestiture to be? profitable?

A divestiture would be profitable if Goodyear received more than ?$____ million after tax. ?(Round to one decimal? place.)

Reference no: EM131849255

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