Chapter2: The Domestic And International Financial Marketplace
Section2.A: Taxes
Problem 5P
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Question
Victoria Enterprises expects earnings before interest and taxes
(EBIT)
next year of
$1.6
million. Its
$301,000,
and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by
$47,000
over the next year. Its tax rate is
30%.
If its WACC is
8%
and its
FCFs
are expected to increase at
5%
per year in perpetuity, what is its enterprise value?
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