Question
In: Finance
You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources,...
You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn's has a reported equity beta of 1.6, a debt-to-equity ratio of 0.4, and a tax rate of 40 percent. Assume a risk-free rate of 5 percent and a market risk premium of 12 percent. Lauryn’s Doll Co. had EBIT last year of $51 million, which is net of a depreciation expense of $5.1 million. In addition, Lauryn's made $7.5 million in capital expenditures and increased net working capital by $4.5 million. Assume the FCF is expected to grow at a rate of 4 percent into perpetuity. What is the value of the firm? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
Solutions
Expert Solution
All the calculation is done in excel and related formulas are mentioned on the side.
Hence value of the firm =
$174.279 million
jeff jeffy answered 1 year agoRelated Solutions
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tax rate of 21 percent. Assume a risk-free rate of 4 percent and a
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reported equity beta of 1.7, a debt-to-equity ratio of 0.4, and a
tax rate of 30 percent. Assume a risk-free rate of 6 percent and a
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reported equity beta of 1.5, a debt-to-equity ratio of 0.3, and a
tax rate of 40 percent. Assume a risk-free rate of 4 percent and a
market risk premium of 12 percent. Lauryn’s Doll Co. had EBIT last
year of $45 million, which is net of a depreciation expense of $4.5
million. In addition, Lauryn's made $4.25 million...
You are going to value Lauryn’s Doll Co. using the FCF model.After consulting various sources,...
You are going to value Lauryn’s Doll Co. using the FCF model.
After consulting various sources, you find that Lauryn's has a
reported equity beta of 1.5, a debt-to-equity ratio of .5, and a
tax rate of 21 percent. Based on this information, what is the
asset beta for Lauryn’s? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
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