BUSINESS 3400 A company is expected to generate free cash flows of $10 million in the coming year
January 6th, 2018
A company is expected to generate free cash flows of $10 million in the coming year and going forward, the growth rate in free cash flows is expected to be constant at 3% per year. The firm currently has a debt to equity ratio of 1.0. The firm has an equity cost of capital of 12%, a debt cost of capital of 8% and the company is in the 34% tax bracket.What is the cost of capital of the company if it is all equity?What is the value of the company if it operates as an all equity firm?At its current debt to equity ratio of 1.0, what is the cost of capital for the company?At its current debt to equity ratio of 1.0, what is the value of the firm as a levered company?