If Ideko's future expected growth rate is 5% and its WACC is 9%,then the continuation value in 2010 is closest to:
A)164,200
B)278,775
C)280,450
D)303,425

Question

Quizplus · Accepted Answer

B)After-Tax interest expense = interest expense(1 - T_c)= 8160( 1 - .35)= 5304 (2010) Note T_c = income tax/pre-tax income = 5678/16,223 = 35% Unlevered net income = net income + after tax interest expense = 10,545 + 5304 = 15,849 NWC = Current assets - current liabilities = 50,872 - 10,448 = 40,424 FCF_t+1 = (1 + g)× Unlevered Net Income_T- g × New Working Capital_T - g × Fixed Assets_T FCF_t+1 = (1 + .05)× 15,849 - .05 × 40,424 - .05 × 69,392 = 11,150.65 V 11ea7cce_3c95_d148_928c_41b65c25b716_TB1626_11 = 11ea7cce_3c95_d149_928c_97b808638c78_TB1626_11 = 11ea7cce_3c95_f85a_928c_53a543d303e7_TB1626_11 = 278,766.25

If Ideko's Future Expected Growth Rate Is 5% and Its