1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
lara [203]
3 years ago
10

A company is expected to have free cash flows of $0.75 million next year. The weighted average cost of capital is WACC = 10.5%,

and the expected constant growth rate is g = 6.4%. The company has $2 million in short-term investments, $2 million in debt, and 1 million shares. What is the stock's current intrinsic stock price?a. $17.39b. $17.84c. $18.29d. $18.75e. $19.22
Business
1 answer:
Vesnalui [34]3 years ago
7 0

Answer:

The stock's current intrinsic price is c. $18.29

Explanation:

Hi, by definition, the intrinsic value of a stock is defined by the present value of its future free cash flows, in our case, for the next year it will be $0.75 million and it will grow at a 6.4% rate, every year, "forever".

SInce there are $2 million in short term investment and $2 million in debt, both amounts cancel out each other therefore, all we have to do is to bring to present value the future free cash flows, as follows.

PresentValue=\frac{FCF(1)}{WACC-g}

So the value of all the outstanding share of the company is:

PresentValue=\frac{750,000}{0.105-0.064} =18,292,683

Since there are 1 million shares, each one is worth $18,292,683/1,000,000= $18.29. So the answer is c.

Best of luck.

You might be interested in
A marketing channel is defined as a group of individuals and organizations that
lisabon 2012 [21]

Correct/complete Question:

A marketing channel is defined as a group of individuals and organizations that

a. consumes about one-half of every dollar spent on products in the United States.

b. directs the flow of products from producers to customers.

c. links producers to other marketing intermediaries.

d. manages transportation and warehousing functions.

e. takes title to products and resells them.

Answer:

B, directs the flow of products from producers to customers.

Explanation:

A marketing channel refers to the persons and activities that are involved in the movement or transfer of goods from the manufacturer to the consumer within the supply chain.

It can also be said to a network of distributing good and services

I hope this helps.

3 0
3 years ago
The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal
puteri [66]

The definition of market equilibrium states that the quantity of labor demanded by employers will equal the quantity supplied at an equilibrium wage.

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

The point at which the forces of demand and supply are equal from both the sides, and there is an expression of a perfect competition in the market, such point is known as an equilibrium.

Hence, option B holds true regarding equilibrium.

Learn more about equilibrium here:

brainly.com/question/13524990

#SPJ1

3 0
2 years ago
Grossnickle Corporation issued 20-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today,
Aleks04 [339]

Answer:

correct option is e.  $1,232.15

Explanation:

given data

Future value = $1,000

Rate of interest = 5.5%

NPER = 19 years

annual coupon bonds = 7.5%

solution

We will use here Present value formula for get current price of the bonds.

so  here PMT is

PMT = Future value  × annual coupon bonds   ................1

put here value

PMT = $1,000 × 7.5%

PMT = $75

The formula we use in excel =  -PV(Rate,NPER,PMT,FV,type)

so we will get here

after solving we get current price of the bond is $1,232.15

correct option is e.  $1,232.15

6 0
3 years ago
Wages of $8,000 are earned by workers but not paid as of december 31, 2017. depreciation on the company’s equipment for 2017 is
lions [1.4K]
The following are the adjusting entries:
- Wages Expense 8000
                 Wages Payable 8000

- Depreciation Expense – Equipment 18000
                 Accumulated Depreciation – Equipment 18000

- Office Supplies Expense 5000
                Office Supplies 5000

- Insurance Expense 2800
                Prepaid Insurance 2800

- Interest Receivable 1050
                 Interest Revenue 1050

- Interest Expense 2500
                Interest Payable 2500
8 0
3 years ago
When faced with an employee performance problem, managers tend to experience two primary emotions: anxiety and anger; anxiety, b
VikaD [51]

Answer:

<u>Behavioral</u> theory can be used to acknowledge positive behavior with rewards and encourage others to improve their sub-par performance.

Explanation:

In employee management, a lot of theories can be used to strategically control human resources towards the fulfillment of the company's objectives.

To address an employees performance problem, managers are faced either with an option to sanction or deal ruthlessly as well as an option to stimulate excellence without necessarily applying strict measures.

To influence positive behavior organically in an organization, Behavioral theory can be applied.

Behavioral theory is a management theory that acknowledge positive behavior with rewards and encourage others to improve their sub-par performance.

5 0
3 years ago
Other questions:
  • Which business document is a contract that defines the tasks, time frame, and deliverables that a vendor must perform for a clie
    8·1 answer
  • An example of filtering would be when a manager gives a subordinate an unwarranted compliment instead of honest criticism. worke
    13·1 answer
  • Lisette works for Southwest Petroleum Corp. Her company is responsible for every aspect of setting up a refinery location for it
    10·1 answer
  • Q 4.35: McGinnis Construction is a cash-basis company with a fiscal year-end of June 30. McGinnis’ employees earn a normal weekl
    15·1 answer
  • The phenomenon of uncommitted data occurs when two transactions are executed concurrently and the first transaction is rolled ba
    9·2 answers
  • Which of the following people would be happy with a $10 price ceiling in this market for movie theatre popcorn bags?
    12·1 answer
  • Mustang Corporation reports the following for the month of April:Finished goods inventory, April 1$32,600 Finished goods invento
    6·1 answer
  • Kinh tê chính trị mục đích của công thức k=c+v
    11·1 answer
  • A recent high school graduate is researching ways she can pay for her college education. She has received three small scholarshi
    12·1 answer
  • the observation that a country reached automotive production overcapacity in 2018, is an aspect of the segment of the general en
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!