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    Capital Structure : key information

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    Suppose K Corporation's projected free cash flow for next year is $100,000, and FCF is expected to grow at a constant rate of 6%. If the company's weighted average cost of capital is 11%, what is the value of its operations? Is it 2,000,000 or 2,100, 000?

    Provide a brief overview of capital structure effects. Please be sure to identify the ways in which capital structure can affect the weighted average cost of capital and free cash flows.

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    https://brainmass.com/business/capital-structure-and-firm-value/capital-structure-key-information-183890

    Solution Preview

    Value of Operations= Free cash flow of Next year /(WACC-Growth rate)
    =100000/(11%-6%)
    $2,000,000.00

    Hence its $2000000

    Provide a brief overview of capital structure effects. Please be sure to identify the ways in which capital structure can affect the weighted average cost of capital and free cash flows.

    A firm's optimal ...

    Solution Summary

    Key information for capital structure are analyzed for K Corporation. A Brief overview of capital structure effects is determined.

    $2.19

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