what is its enterprise​ value?

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
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Question

Victoria Enterprises expects earnings before interest and taxes

​(EBIT​)

next year of

$1.6

million. Its depreciation and capital expenditures will both be

$301,000​,

and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by

$47,000

over the next year. Its tax rate is

30%.

If its WACC is

8%

and its

FCFs

are expected to increase at

5%

per year in​ perpetuity, what is its enterprise​ value?

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