klp.3 Problem 13-25 Company Valuation (LO5)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:Year1234Earnings before interest, taxes, depreciation, andamortization (EBITDA)81101116121Depreciation21313641Pretax profit6070808024283232Tax at 40%10131618InvestmentFrom year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed40% by equity and 60% by debt. Its cost of equity is 12%, its debt yields 8%, 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 thenearest whole amount.)> Answer is complete but not entirely correct.Total value$497 millionb. What is the value of Laputa's equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimalplaces.)Laputa's equitymillion

Equity's weight = 40%Debt's weight =60%Cost of equity = 12%Cost of debt = 8% Tax rate =…

Problem 13-25 Company Valuation (LOS) 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: Year 1 2 3 4 Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ $ $ 81 101 116 121 Depreciation 21 31 36 41 Pretax profit 60 70 80 80 24 20 22 22 Tax at 10°

Problem 13-25 Company Valuation (LOS) 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: Year 1 2 3 4 Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ $ $ 81 101 116 121 Depreciation 21 31 36 41 Pretax profit 60 70 80 80 24 20 22 22 Tax at 10°

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 26SP

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