Alculate the project and equity free cash flows for the


Calculate the Project and Equity Free Cash Flows for the following scenario. We want to finance a project with 30% debt (70% equity). We expect $1,000,000 in sales for next year; COGS to be 55% of sales; depreciation will be $400,000 and offset with $400,000 in new CAPEX. Assume that Year 1 is the first year of a perpetuity with no growth (you get the t1 cash flow for ever). The firm's cost of debt is 4% (assume the debt is perpetual and you never pay down any principal); the cost of equity is 12%; the tax rate is 35%. Hint: to determine the EFCF, you will need to determine the value of the firm and the value of "D" so you can find the interest payment. Please use Excel..

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Alculate the project and equity free cash flows for the
Reference No:- TGS01368767

Expected delivery within 24 Hours