question archive There are no taxes
There are no taxes
Subject:BusinessPrice: Bought3
There are no taxes. A company has an asset beta of 0.75. rI'he expected return on the market is 12% and the risk free rate is 4%. Its assets are expected to produce a cash?ow (EBITDA) of $100 every year starting next year. The ?rm has debt which is risk free and pays $20 every year starting one year from now. 1. What is the value of the assets? (Hint: value of something is PV of ECF at 000) 2. What is the value of the ?rln's debt? (Hint: value of something is PV of ECF at OCC) 3. Write down the ?rm's balance sheet. 4. What is the beta of the ?rm's equity? What is the OCC of the ?rms equity?
