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Estimate the new value of the firm

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Ruger Inc. is a mature, manufacturing firm, growing 3% a year. It expects to generate $15 million in after-tax operating income and $6 million in free cash flow to the firm next year. You believe that the firm can be significantly restructured to double its return on capital on new investments (existing investments cannot be altered). If the cost of capital is 8%, estimate the new value of the firm through the restructuring (assuming growth stays at 3%).

Reference no: EM133111318

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