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In the face of disappointing earnings results and increasingly assertive institutional stockholders, Eastman Kodak was considering the sale of its health division which had an EBIT of $560 million in its most recent year from revenues of $5285 billion. The firm's expected growth rate is expected to be 6% for the next 5 years and fall to 2% thereafter. Capital expenditure in the health division was $420 million last year and depreciation was $350 million. Both are expected to grow at 4% in the long run. Working capital requirements are 10% of sales. The average equity beta of companies competing with Eastman Kodak's health division was 1.15. Eastman Kodak's health division has a debt ratio of .20 and a debt cost of 7.5%. The company has a tax rate of .40 and the T-Bond rate is 7%.
a. Estimate the division's WACC.
b. Estimate the division's value using the DCF approach.
Prepare to write a review of a restaurant or a dining facility on campus.
A bank pays interest quarterly with an EAR of 8%. What is the periodic interest rate applicable per quarter?
assume that you are a consultant to broske inc. and you have been provided with the following data d1 0.67 p0 27.50
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Assume that the dollar is presently weak and is expected to strengthen over time. How will these expectations affect the tendency of U.S. investors to invest in foreign securities? Explain how low U.S. interest rates can affect the tendency of U.S.-b..
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A coin is tossed 5 times. The probability of tails on any toss is 0.43. Let x denote the number of tails that comes up. a) Find the probability that tail shows up exactly twice. b) Find the probability that tail shows up at most once.
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