Suppose Goodyear Tire and Rubber Company is considering divesting one of its manufacturing plants. The plant is expected

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answerhappygod
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Suppose Goodyear Tire and Rubber Company is considering divesting one of its manufacturing plants. The plant is expected

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Suppose Goodyear Tire and Rubber Company is considering
divesting one of its manufacturing plants. The plant is expected to
generate free cash flows of $1.62 million per​ year, growing
at a rate of 2.5% per year. Goodyear has an equity cost of capital
of 8.7%, a debt cost of capital of 6.8%​, a marginal corporate tax
rate of 33%​, and a​ debt-equity ratio of 2.7. If the plant
has average risk and Goodyear plans to maintain a constant
debt-equity ratio, what after-tax amount must it receive for the
plant for the divestiture to be profitable?
A divestiture would be profitable if Goodyear received more
than_ million after tax.  ​
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