Reported equity beta-what is the value of the firm

Assignment Help Financial Management

Reference no: EM131043549

You are going to value Sheldon’s Flag co. using the FCF model. After consulting various sources, you find that Sheldon has reported equity beta of 1.7. a debt-to equity ratio of .5, and a tax rate of 40%. Assume a risk-free rate of 6% and a market risk premium of 12%. Sheldon’s Flag co. had EBIT last year of $57 million, which is net of a depreciation expense of $5.7 million. In addition, Sheldon made $4.3 million in capital expenditures and increased net working capital by $2.6 million. Assume her FCF is expected to grow at a rate of 2% into perpetuity. What is the value of the firm?

Reference no: EM131043549

Questions Cloud

Explain how mission-vision and values might inform your role : Then explain the decision you might make in response to that ethical dilemma. Include an explanation of how the Walden Mission and Vision and the principles you selected from the NASW ethical standards influenced your decision.

Find the average for quiz and assignment grades : In this assignment, you will develop a C++ program to input and find the average for quiz and assignment grades, then calculate the overall average and letter grade.

Analyze the impact of e-commerce on a business : This assignment provides you with an opportunity to analyze the impact of e-commerce on a business. First, choose ONE of the following case studies that can be located in the Business Source Complete database of the online library:

Comparing and contrasting two learning theories : Critically examining the concept of creativity and its role in intelligence and problem solving, Comparing and contrasting two learning theories from the same group (e.g., Thorndike vs. Skinner)

Reported equity beta-what is the value of the firm : You are going to value Sheldon’s Flag co. using the FCF model. After consulting various sources, you find that Sheldon has reported equity beta of 1.7. a debt-to equity ratio of .5, and a tax rate of 40%. Assume a risk-free rate of 6% and a market ri..

Increase the amount of debt in its capital structure : Other things held constant, which of the following events would be most likely to encourage a firm to increase the amount of debt in its capital structure? Its sales are projected to become less stable in the future. Management believes that the firm..

Compute her total expenses and what should be her decision : Stacie wants to buy a new car. She has the option of buying the car for $35,000 with no money down and 1% financing for three years or get a cash discount of $4,000. She car get financing at the local bank for 4% per year. Compute her total expenses ..

Money market account with an annual return : You plan to deposit $2,100 per year for 6 years into a money market account with an annual return of 3%. You plan to make your first deposit one year from today. What amount will be in your account at the end of 6 years? You and your wife are making..

Prepare an analysis of residual income for each segment : Sherwin Corporation has three business segments: paint, wallpapers, and tools. The company's assumed cost of capital is 10%. Financial information about each segment follows: Prepare an analysis of residual income for each segment, and note which s..

User Account

All Pages