Banoffee Ltd operates a chain of Cafes around the country. You have been providedwith the following projections for the company (in millions of Rupees)EBITNet Cap ExTotal WorkingCapitalCost of EquityPre-tax Cost of Debt1110.00306012%8%2€ 125.0037.5Debt Equity RatioThe company has a tax rate of 20%,The firm will grow at 5% forever, starting in year 4. Theworking capital currently is 48 million.a. Estimate the expected cash flows to the firm for years 1-4.b. Estimate the cost of capital each year for years 1-4.c. Estimate the terminal (Horizon) value.20%7011%7.50%20%3156.2546.58211%7%20%4 (Terminal{Horizon} year)₹172329010%7%20%

Cash flow to the firm refers to the amount of money that is available to all of the capital…

Answered: Banoffee Ltd operates a chain of Cafes…

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

Section: Chapter Questions

Problem 1PS

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