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Suppose Goodyear Tire and Rubber Company is considering divesting one of its manufacturing plants. The plant...

Suppose Goodyear Tire and Rubber Company is considering divesting one of its manufacturing plants. The plant is expected to generate free cash flows of $ 1.55 million per​ year, growing at a rate of 2.4 % per year. Goodyear has an equity cost of capital of 8.7 %​, a debt cost of capital of 7.1 %​, a marginal corporate tax rate of 32 %​, and a​ debt-equity ratio of 2.7. If the plant has average risk and Goodyear plans to maintain a constant​ debt-equity ratio, what​ after-tax amount must it receive for the plant for the divestiture to be​ profitable? Round to one decimal

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Answer :- $44.3 million

jeff jeffy answered 1 year ago
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