St. Blues Technologies. expected (next year) EBIT is $482.00, its tax rate is 39

Question

St. Blues Technologies. expected (next year) EBIT is $482.00, its tax rate is 39%, depreciation is $11.00, planned capital expenditures are $96.00, and planned DECREASES in net working capital is $17.00. What is the free cash flow to the firm (FCFF)? 4 The firm's interest expense is $19.00. Assume the tax rate is 39% and the net debt of the firm DECREASES by$.. What is the free cash flow to equity (FCFE)? What is the market value of equity if the FCFE is projected to grow at 4% indefinitely and the cost of equity is 12%? (Round this answer to 2 decimal places.)

Explanation / Answer

FCFF=EBIT*(1-tax rate)+depreciation-capital expenditures-changes in working capital

=482*(1-39%)+11-96-(-17)

=226.02

FCFE=FCFF-interest*(1-tax rate)+net borrowings

=226.02-19*(1-39%)-8

=206.43

market value of equity=FCFE next year/(ke-g)

=206.43/(12%-4%)

=2580.38

the above is answer..

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