Calculate the annual economic value added, Corporate Finance

Westbrook Inc. is financed with debt that costs it 5% (pre-tax)or $12.5m annually and expects to generate an EBITof $50m per year perpetually.

The company is at its target debt/equity ratio of 1.  Depreciation is expected to remain at $2.5m annually and taxes at the rate of 40% (for the foreseeable future).

It pays out all its net income as dividends. The risk-free rate (RF) is 3% and the market risk premium(MRP) is 7%. Westbrook's Beta is 1.0.

What is Westbrook's anticipated annual Economic Value Added (EVA)?

Posted Date: 4/5/2013 5:28:15 AM | Location : United States







Related Discussions:- Calculate the annual economic value added, Assignment Help, Ask Question on Calculate the annual economic value added, Get Answer, Expert's Help, Calculate the annual economic value added Discussions

Write discussion on Calculate the annual economic value added
Your posts are moderated
Related Questions
How has the merger activity in the past decade affected the concentration of assets in the banking industry? A: Over the last decade, the number of commercial banks declined

Question: (a) The Mauritius Automated Clearing and Settlement System (MACSS) is the Mauritian Real-time Gross Settlement (RTGS) system. (i) Define the term gross settlement

Have mergers affected competition? A: Federal Reserve data show that measured on the local level, where competition takes place, markets have actually experienced more bank

You are a ceo of a sotware firm that has limited access to debt equity markets. The average return on last year projects is 28 % . and cost of capital is 12%. would npv pr Irr be

Ask qCan the goal of maximizing the value of the stock conflict with other goals such as avoiding unethical or illegal behavior? In particular, do subjects like customer and employ

The cost of capital for a firm can differ from the cost of capital for each of its businesses. When a firm has multiple businesses, it is important to use the cost of capital appro

what will be impact on the operating leverage of a firm if it proceeds for additional borrowings

Hi, I''m looking for a tuttor that can help analysing free Cash flow for a Company - for an exam I''m preparing for.

Assume that there are two firms, firm A and firm B. The firms have identical present values at £10,000 and an identical future value profile as given in the picture below. The prob

Here is the pro-forma income statement for Semen Indonesia, an overseas venture that Cemex is planning to invest in.  In this exercise, you will need to evaluate the inve