ces \table[[...]] From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 50% by equity and 50% by debt. Its cost of equity is 19%, its debt yields 10%, and it pays corporate tax at 40%. a. Estimate the company's total value. (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.) Total value nillion b. What is the value of Laputa's equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Laputa's equity million C 1 2 3 4 Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 40% $ $ $ $ 88 108 123 128 28 38 43 48 60 70 80 80 24 28 32 32 Investment 17 20 23 25 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 50% by equity and 50% by debt. Its cost of equity is 19%, its debt yields 10%, and it pays corporate tax at 40% a. Estimate the company's total value. (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.) Total value $ 502 million b. What is the value of Laputa's equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Laputa's equity million
ces \table[[...]] From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 50% by equity and 50% by debt. Its cost of equity is 19%, its debt yields 10%, and it pays corporate tax at 40%. a. Estimate the company's total value. (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.) Total value nillion b. What is the value of Laputa's equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Laputa's equity million C 1 2 3 4 Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 40% $ $ $ $ 88 108 123 128 28 38 43 48 60 70 80 80 24 28 32 32 Investment 17 20 23 25 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 50% by equity and 50% by debt. Its cost of equity is 19%, its debt yields 10%, and it pays corporate tax at 40% a. Estimate the company's total value. (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.) Total value $ 502 million b. What is the value of Laputa's equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Laputa's equity million
Chapter13: Capital Structure Concepts
Section: Chapter Questions
Problem 6P
Related questions
Question
None
![ces
\table[[...]] From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4
levels. Laputa is financed 50% by equity and 50% by debt. Its cost of equity is 19%, its debt yields 10%, and it pays
corporate tax at 40%. a. Estimate the company's total value. (Do not round intermediate calculations. Enter your
answer in millions rounded to the nearest whole amount.) Total value nillion b. What is the value of Laputa's equity? (Do
not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Laputa's equity million
C
1
2
3
4
Earnings before interest, taxes, depreciation, and amortization
(EBITDA)
Depreciation
Pretax profit
Tax at 40%
$
$
$
$
88
108
123
128
28
38
43
48
60
70
80
80
24
28
32
32
Investment
17
20
23
25
From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed
50% by equity and 50% by debt. Its cost of equity is 19%, its debt yields 10%, and it pays corporate tax at 40%
a. Estimate the company's total value. (Do not round intermediate calculations. Enter your answer in millions rounded to the
nearest whole amount.)
Total value
$
502 million
b. What is the value of Laputa's equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal
places.)
Laputa's equity
million](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4a385ab2-b993-4959-b48c-b9045527da57%2Fb8cde253-db98-41c7-9370-73a7877719e9%2Flhps7pr_processed.png&w=3840&q=75)
Transcribed Image Text:ces
\table[[...]] From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4
levels. Laputa is financed 50% by equity and 50% by debt. Its cost of equity is 19%, its debt yields 10%, and it pays
corporate tax at 40%. a. Estimate the company's total value. (Do not round intermediate calculations. Enter your
answer in millions rounded to the nearest whole amount.) Total value nillion b. What is the value of Laputa's equity? (Do
not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Laputa's equity million
C
1
2
3
4
Earnings before interest, taxes, depreciation, and amortization
(EBITDA)
Depreciation
Pretax profit
Tax at 40%
$
$
$
$
88
108
123
128
28
38
43
48
60
70
80
80
24
28
32
32
Investment
17
20
23
25
From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed
50% by equity and 50% by debt. Its cost of equity is 19%, its debt yields 10%, and it pays corporate tax at 40%
a. Estimate the company's total value. (Do not round intermediate calculations. Enter your answer in millions rounded to the
nearest whole amount.)
Total value
$
502 million
b. What is the value of Laputa's equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal
places.)
Laputa's equity
million
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