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Estimate the value of tigers ltd

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Reference no: EM133072880

Tigers Ltd has $100 million in debt outstanding, in both book value and market value terms, and expects to maintain a debt ratio of 40%. The beta of the stock is 1.10 currently, equity risk premium is 5.5% and the current long-term bond rate is 7.5%. The firm is in stable growth and expects to grow 5% a year in perpetuity. The capital expenditures in the latest year were $10 million, and there is no working capital requirement. The latest income statement of Tigers Ltd is provided below: 

Item

Amount ($ in millions)

Revenues

100

 COGS

60

 Depreciation

10

EBIT

30

Interest expense

10

EBT

20

Taxes

8

Net Income

12

Use this data to estimate the value of Tigers Ltd.

Reference no: EM133072880

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