Ebit 1000 depreciation 250 taxes 100 net increase in


EBIT = 1,000 Depreciation = 250 Taxes = 100 Net increase in Working Capital = 50 Net Increase in Capital Expenditure = 250 Long-term sustainable growth = 4% Risk free rate = 3% Beta = 1.5% Equity Risk Premium = 7% D/E = 0.333 Investment = -$10,000 (occurs at time = 0) Cost of debt (prior to tax adjustment) = 7% Corporate tax rate = 33% FIND: Net Present Value (NPV). Use CFFA for cashflow and WACC for the discount rate. Multiple choice options provided: 900 1,498 1,644 1,450 1,725 1,877 850

 

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Financial Management: Ebit 1000 depreciation 250 taxes 100 net increase in
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