Estimate the value of the firm

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Question

Jeeves Software is a small software firm in high growth. The firm is all equity financed. In the current year, the firm earned $20 million in after-tax operating income on capital invested of $60 million. The firm's cost of equity is 15%. a. Assume that the firm will be able to grow its economic value added 15% a year for the next five years, and that there will be no excess returns after year 5. Estimate the value of the firm. How much of this value comes from the EVA and how much from capital invested?

Reference no: EM133305926

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