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Phoenix [80]
3 years ago
6

River Enterprises has ​$502 million in debt and 22 million shares of equity outstanding. Its excess cash reserves are $ 15 milli

on. They are expected to generate ​$195 million in free cash flows next year with a growth rate of 2​% per year in perpetuity. River​ Enterprises' cost of equity capital is 13​%. After analyzing the​ company, you believe that the growth rate should be 3​% instead of 2​%. How much higher​ (in dollars) would the price per share be if you are​ right? g
Business
1 answer:
Sedbober [7]3 years ago
4 0

Answer:

The stock price would be higher by $7.37

Explanation:

Free cash flow to equity = 195 million with a growth rate of 2% in perpetuity

Value of equity = Free cash flow to equity ÷ (Ce -g) = 195 million ÷ (13% - 2%)

= 190 ÷ 0.11 = $1,772,727,272.73 = $1,773 million

If growth rate is 3%, value of equity = 195 ÷ (13%-3%) = 195 ÷ 0.1 = $1,950  million

a. Value of stock = (1,773 + 15) million ÷ 22 = $81.27

b. Value of stock with 3% = 1,950 ÷ 22 = $88.64

Thus stock price would be higher by = b-a = $7.37

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Answer:

26 packages

Explanation:

Given that:

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The lead time L = 1.5 weeks

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At the service level (SL) if we find the P(Z) of the SL using Excel, we have:

P(Z) = NORMSINV(0.95)

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7 0
3 years ago
it is usually less expensive to rent an apartment than to purchase a similar sized home when chapter 15
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It is usually less expensive to rent an apartment than to purchase similar sized home when the land in the area is overprized.

<h3>What is an apartment?</h3>

An apartment, also known as a flat, is a type of residential real estate that is a self-contained living space that is typically one story high and affixed to a building. These general buildings go by numerous names; a list is below. The housing tenure of flats also varies greatly, from large-scale public housing to owner occupancy within what is officially a condominium (strata title or commonhold) to tenants renting from a private landlord (see leasehold estate). The term "apartment" is more frequently used in professional real estate and architectural circles in the UK than in other contexts, where "flat" is more frequently—though not always—used to refer to an apartment with a single level (thus, a "flat" apartment).

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7 0
1 year ago
Sara purchased a life insurance policy as an investment from her neighbor, Angela. Angela, the original policy holder had paid p
Pavlova-9 [17]

Answer:

$16,500

Explanation:

She invested = $12,000

Total money spent to acquire the policy = ($16,500 + $5000) = $21,500

Total money invested on policy = $21500 + $12000

Total money invested on policy = $33500

Money that sara got after angela died = $50,000

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6 0
3 years ago
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crimeas [40]

Answer:

Explanation:

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2.The price of laser tag has fallen,therefore,quantity demanded increases.

3.The price of dressers and desks has risen,therefore,quantity demanded decreases.

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3 0
4 years ago
Consider a market in which the government imposes a price floor. Assume that neither supply nor demand is perfectly elastic nor
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8 0
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