Constant growth rate of free cash flows is 5%. Rate of return is 10%. Market value of debt=200, number of shares outstanding is 10. The company's total assets are worth 1200, and NOPAT is at 350. Note that the current risk free rate is 3%
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Each type of financing should be used with caution and vigilance. Taking
on too much debt can dilute company performance metrics such as the
debt-to-assets and times-interest-earned ratios, as well as reducing
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