Antonio's accounting firm has an unlevered beta of 1.1. In a good year (which happens...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Antonio's accounting firm has an unlevered beta of 1.1. In a good year (which happens 47% of the time), his EBIT is $268,426. In other years, his EBIT is $165,120. His firm has a debt to equity ratio of 1.2, and a cost of debt of 6.2%. If the riskless rate is 2.3%, the tax rate is 25% and the expected return on the S&P500 is 11.4%, what price would Antonio be willing to sell his business for if the next yearly cash flow is one year from today and these cash flows will continue for the foreseeable future? Use the WACC method and show all calculations.
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.