Can you please give a step by step explanation and provide any formulas used.? Megas produces giros and stuffed grape leaves. It has the following capital structure. Its debt is $60m and its equity is $40M. Its risk free rate is 3%, while the expected return of the market is 10%, and its beta is 1.2. Megas intends to invest $500 m into a giro project wanting to become the biggest seller in the American continent. Thus, it expects to receive $175m (EBIT(1-t)) annually for 20 years on this investment. The depreciation is straight line for 20 years (based on the $500m investment. For the grape leaves project, Megas will invest $400 million and receive $100m annually, in terms of both operations after tax plus depreciation. Compute the value of Megas.
Can you please give a step by step explanation and provide any formulas used.?
Megas produces giros and stuffed grape leaves. It has the following capital structure. Its debt is $60m and its equity is $40M. Its risk free rate is 3%, while the expected return of the market is 10%, and its beta is 1.2. Megas intends to invest $500 m into a giro project wanting to become the biggest seller in the American continent. Thus, it expects to receive $175m (EBIT(1-t)) annually for 20 years on this investment. The depreciation is straight line for 20 years (based on the $500m investment.
For the grape leaves project, Megas will invest $400 million and receive $100m annually, in terms of both operations after tax plus depreciation. Compute the value of Megas.
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