A companys free cash flow is 2 million per year and it is expected to grow at a constant rate of 5% a year, its beta is 1.4. What is the value of the operation? If the company has 10.82 million in debt, what is the current value of the stock?
The Corporation is interested in acquiring Vandell Corporation. Vandel l has 1 million shares outstanding and a target capital structure consisting of 30% debt. Vandell’s debti nterest rate is 8%. Assume that the risk-free rate of interest is 5% and the market risk premium is 6%. Both Vandel and Hastings face a 40% tax rate.
Please do in excel to be able to see formulas.