FIN 421- MCI Communications had earnings before interest and taxes
MCI Communications had earnings before interest and taxes of $3356 million in 1994 (Its net income after taxes was $855 million). It had capital expenditures of $2500 million and depreciation of $1100 million; Working capital increased by $250 million. It expects free cash flows to the firm to grow 15% a year for the next 5 years and 5% a year after that. The cost of capital is 10.5% for the next 5 years and 10% after that. The company faces a tax rate of 36%. What is the market value of MCI?
