MCS Corp currently has market capitalization is $310 million and the appropriate discount rate is...
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MCS Corp currently has market capitalization is $310 million and the appropriate discount rate is 12 percent. The EBIT for next year is projected to be $45. EBIT is expected to grow at 7 percent per year for the next five years before slowing to 5 percent in Year 6 and stay at 5 percent in perpetuity from there on. Net working capital, capital spending, and depreciation as a percentage of EBIT are expected to be 6 percent, 12 percent, and 5 percent, respectively. The company has 1.95 million shares outstanding, and the tax rate is 35 percent. What is the value of the business today? (Hint: Compute FCFF for Years 0-6 and calculate terminal value in Year 5.) Enter your answer in millions (e.g., 120.45 million or 345.12 million).
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