NARRBEGIN: Normaltown Corporation
Normaltown Corporation
An analyst has predicted the free cash flows for Normaltown Corporation for the next four years:
-After 2007,the free cash flows are expected to grow at an annual rate of 5%.The weighted average cost of capital for Normaltown is 12%.If the market value of the firm's debt is $100 million,find the value of the firm's equity.
A) $201.81 million
B) $213.00 million
C) $231.43 million
D) $271.20 million
Correct Answer:
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Normaltown Corporation
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