Malazn Pleasure
External Auditor
- Joined
- Feb 3, 2004
- Messages
- 1,224
- Gender
- Male
- HSC
- 2001
hey everyone, im trying to do this question......n im hving troubles....can any1 help me? thanks
Smith Chemist is a pharmaceutical company. The firm is all-equity financed with an after-tax capitalisation rate of 9%. If the firm is expecting to generate a net free cash flows (before tax) is $5 million into perpetuity and the corporate tax rate is remained to be at 30%, what would be the expected value of Smith Chemist under the following different scenarios:
a. The firm continues to remain all-equity financed.
b. The firm takes $25 million permanent debt at an interest rate of 8% per annum.
c. The firm only borrows the $20 million for 10 years at 10% per annum."
u just hv to find the expected value of the company with the 3 senarios.....
Smith Chemist is a pharmaceutical company. The firm is all-equity financed with an after-tax capitalisation rate of 9%. If the firm is expecting to generate a net free cash flows (before tax) is $5 million into perpetuity and the corporate tax rate is remained to be at 30%, what would be the expected value of Smith Chemist under the following different scenarios:
a. The firm continues to remain all-equity financed.
b. The firm takes $25 million permanent debt at an interest rate of 8% per annum.
c. The firm only borrows the $20 million for 10 years at 10% per annum."
u just hv to find the expected value of the company with the 3 senarios.....