A company has an annual EBIT of 1200000 SEK in perpetuity. There is no growth. The firms has debt equivalent to 75 perce

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answerhappygod
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A company has an annual EBIT of 1200000 SEK in perpetuity. There is no growth. The firms has debt equivalent to 75 perce

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A company has an annual EBIT of 1200000 SEK in perpetuity. There
is no growth. The firms has debt equivalent to 75 percent of market
value. The beta value of the equity is then 1.54, risk free
interest rate is 4% and the risk premium for the market portfolio
is 5.5%. Observe that tax need to be paid and the tax rate is 28%.
The interest rate is 4%. Assume that on the loan interest is only
paid and that the annual surplus will remain unchanged in the
foreseeable future.
For this task round your answers to full integers (no
decimals).
For your help:
βlevered = βunlevered * [1+
(1-tax rate) (Debt / Equity)]
Vlevered = APV = Vunlevered +
PV(Interest Tax Shield)
a. Calculate the company's value based on cash flow without
borrowing plus the loan's impact on the value
(APV).
The Vunlevered is ¿?
SEK.
The PV(Interest Tax Shield) is ¿? SEK.
b. Calculate the value of the company with cash flow to the firm
(FKFF) and average cost of capital (WACC) as a base.
The value of the company is ¿?
SEK.
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