You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its futureInvestments in new plant and working capital:Earnings before interest, taxes, depreciation, and amortization (EBITDA)DepreciationPretax profitTax at 30%InvestmentCheck my work mode: This shows what is correct or incorrect for the work you have compAnswer is complete but not entirely correct.757a. Total valueb. Laputa's equity$$ⓇⓇ1$.733340121970YearFrom year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed60% by equity and 40% by debt. Its cost of equity is 18%, its debt yields 9%, and it pays corporate tax at 30%2$9343501522a. Estimate the company's total value.Note: Do not round Intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.b. What is the value of Laputa's equity?Note: Do not round Intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.$ 188486018254$ 11353601827

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Description: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its futureInvestments in new plant and working capital:Earnings before interest, taxes, depreciation, and amortization

The weighted average cost of capital measures the typical cost a business pays to finance its…

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a. Estimate the company's total value. Note: Do not round Intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round Intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. Answer is complete but not entirely correct. a. Total value b. Laputa's equity 757

a. Estimate the company's total value. Note: Do not round Intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round Intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. Answer is complete but not entirely correct. a. Total value b. Laputa's equity 757

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 2STP

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Use the information provided to answer the questions Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places).Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). Use your answers from previous question to recommend the project that should be chosen. Motivateyour choice.
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You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment X Answer is complete but not entirely correct. a. Total value b. Laputa's equity 1 $ 82 12 70 21 11 $ $ Year 752 376 x 2 $ 102 22 80 24 14 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 13%, its debt yields 9%, and it pays corporate tax at 30%. 3 $ 117 27 90 27 17 a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest…
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