A company has annual after-tax operating cash flows of P2,000,000 per year which are expected to continue in perpetuity. The company has a cost of equity of 10%, a before tax cost of debt of 5% and an after tax weighted average cost of capital of 8% per year. Corporation tax is 20%. What is the theoretical value of the company? Group of answer choices P20m P25m P40m P50m

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter17: Multinational Capital Structure And Cost Of Capital
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A company has annual after-tax operating cash flows of P2,000,000 per year which are expected to continue in perpetuity. The company has a cost of equity of 10%, a before tax cost of debt of 5% and an after tax weighted average cost of capital of 8% per year. Corporation tax is 20%. What is the theoretical value of the company? 

Group of answer choices 

P20m 

P25m 

P40m 

P50m 

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