I need to solve for the asset value, but I'm not sure what rate needs to be used in order to solve for NPV, and then Asset Value. Formating & some information is in the picture attached below. Asset Beta= 1.096303 Discount Rate= 0.13372 Working capital to support sales is estimated to be 15.65% of yearly sales for the first 5 years and then is projected to slow to a 4.59% annual growth rate thereafter. The marginal corporate income tax rate is expected to average 23.67% barring any changes to the corporate tax code and the projected annual growth rate of Free Cash Flow (FCF) in the terminal phase is expected to grow approximately 1% more than the current risk-free rate of return indefinitely. Historically, the debt-equity ratio has averaged roughly 116% for which Ljutic A/I Inc.’s current debt level is $39,889,950 with an average maturity of 6 years and an interest rate on this debt averaging 8.175%. Upon a regression analysis, the historical equity Beta was calculated to be 2.067, while the risk-free rate of return is given as 2.876% and the market rate of return is assumed to be 12.45%. Currently there are 3,231,443 shares of common stock outstanding.
I need to solve for the asset value, but I'm not sure what rate needs to be used in order to solve for
Asset Beta= 1.096303
Discount Rate= 0.13372
Working capital to support sales is estimated to be 15.65% of yearly sales for the first 5 years and then is projected to slow to a 4.59% annual growth rate thereafter. The marginal corporate income tax rate is expected to average 23.67% barring any changes to the corporate tax code and the projected annual growth rate of
Historically, the debt-equity ratio has averaged roughly 116% for which Ljutic A/I Inc.’s current debt level is $39,889,950 with an average maturity of 6 years and an interest rate on this debt averaging 8.175%. Upon a regression analysis, the historical equity Beta was calculated to be 2.067, while the risk-free rate of return is given as 2.876% and the market rate of return is assumed to be 12.45%. Currently there are 3,231,443 shares of common stock outstanding.
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