FinCorp's free cash flow to the firm is reported as $235 million. The firm's interest expense is $28 million. Assume the corporate tax rate is 21% and the net debt of the firm increases by $3 million. What is the market value of equity if the FCFE is projected to grow at 3% indefinitely and the cost of equity is 12 % ? (Round your answer to 2 decimal places.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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FinCorp's free cash flow to the firm is reported as $235 million. The firm's interest expense is $28 million. Assume the corporate tax rate is 21% and the net debt
of the firm increases by $3 million. What is the market value of equity if the FCFE is projected to grow at 3% indefinitely and the cost of equity is 12 % ? (Round
your answer to 2 decimal places.)
Transcribed Image Text:FinCorp's free cash flow to the firm is reported as $235 million. The firm's interest expense is $28 million. Assume the corporate tax rate is 21% and the net debt of the firm increases by $3 million. What is the market value of equity if the FCFE is projected to grow at 3% indefinitely and the cost of equity is 12 % ? (Round your answer to 2 decimal places.)
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