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
Flower stands whose beneficial life spans a period of eight years was purchased on 1 August  2011 for $12,000.   It can be sold as scrap for $2,000.  The business has a financial y

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


The Directors of Rohan Plc are discussing the importance of the dividend policy on the market value of their firm. The Chairman considers that the dividend is important and does

hook industries is considering the replacement of one of its old drill presses. three alternatives replacement presses are under consideration. the relevant cash flows associated w

Question 1: Collect a current annual report (2009) of an Australia listed company. Select the firm that reported the following assets. Select BOTHtypes of assets. Proper

The following information is given for Burgundy Plc. The before tax rate on debt is 10%, whereas the required return on equity is 20%. The total amount in use (equity + debt), V, i


The managing directors of three profitable listed companies discussed their company’s dividend policies at a business lunch. Company A has deliberately paid no dividends for the p

As What is the major value of the weighted cost of capital calculation for the firm?k question #Minimum 100 words accepted#