What is the company total value and value of venz equity

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Reference no: EM132047052

Venz Corporation has decided to go public. As a result you have been hired to estimate the value of Venz Corporation. Venz is forecasting that next year’s operating cash flow (depreciation plus after-tax profit) will be $70 million and that investment expenditures will be $35 million. Thereafter, operating cash flows and investment expenditures will grow at 5% per year.

The common stock of Venz has a beta of .90. The Treasury bill rate is 4%, and the market risk premium is estimated at 8%. Venz’s capital structure is 30% debt, paying a 5% interest rate, and 70% equity. Also, the corporate tax rate is 40%.

a) What is the company’s total value.

b) What is the value of Venz’s equity.

Reference no: EM132047052

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