Reference no: EM13911519
Schwarzentraub Industries' expected free cash flow for the year is $600,000; in the future free cash flow is expected to grow at a rate of 8%. The company currently has no debt, and its cost of equity is 12%. Its tax rate is 40%. (Hint: Use equations and .)
a. Find VU. Enter your answer in millions. Round your answer to two decimal places. $ million
b. Find VL if Schwarzentraub uses $3 million in debt with a cost of 9%. Use the APV model that allows for growth. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ million
Find rsL. Round your answer to one decimal place. rsL = % c.Based on VU from part a, find VL using the MM model (with taxes) if Schwarzentraub uses $3 million in 9% debt. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ million
Find rsL. Round your answer to one decimal place. rsL = %
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: Schwarzentraub Industries' expected free cash flow for the year is $600,000; in the future free cash flow is expected to grow at a rate of 8%. The company currently has no debt, and its cost of equity is 12%. Its tax rate is 40%. Find VL if Schwarzen..
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