You are going to value sheldonrsquos flag co using the fcf


You are going to value Sheldon’s Flag co. using the FCF model. After consulting various sources, you find that Sheldon has reported equity beta of 1.7. a debt-to equity ratio of .5, and a tax rate of 40%. Assume a risk-free rate of 6% and a market risk premium of 12%. Sheldon’s Flag co. had EBIT last year of $57 million, which is net of a depreciation expense of $5.7 million. In addition, Sheldon made $4.3 million in capital expenditures and increased net working capital by $2.6 million. Assume her FCF is expected to grow at a rate of 2% into perpetuity. What is the value of the firm?

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Financial Management: You are going to value sheldonrsquos flag co using the fcf
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