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
Fiesta28 [93]
3 years ago
5

You have been assigned the task of using the corporate, or free cash flow, model to estimate Petry Corporation's intrinsic value

. The firm's WACC is 10.00%, its end-of-year free cash flow (FCF1) is expected to be $70.0 million, the FCFs are expected to grow at a constant rate of 5.00% a year in the future, the company has $200 million of long-term debt and preferred stock, and it has 30 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock?
Business
1 answer:
Oxana [17]3 years ago
6 0

Answer:

$40 million

Explanation:

The computation of stock price is shown below:-

For computing the stock price first we need to compute the firm value which is below:-

Firm value = Free cash flow-1 ÷ (Weighted average cost of capital - Growth rate)

= $70.0 million ÷ (10% - 5%)

= $70.0 million ÷ 5%

= $1,400 million

Stock price = (Firm value - Debt) ÷ Number of shares

= ($1,400 million - $200 million) ÷ 30 million

= $1,200 million ÷ 30 million

= $40 million

You might be interested in
ane is planning to offer a Groupon for inner tube rentals that she will distribute on hot, sunny, summer days by the river that
sweet [91]

Probability assigned:|

x 30 60 120 180

P(x) .10 .40 .40 .10

Answer:

Jane

Price of Groupon for a revenue of $300 is:

$3

Explanation:

a) Data and Calculations:

Expected Sales volume:

Number of Tubes  x   30     60      120     180

Probability P(x)           .10     .40      .40      .10

Expected values          3      24       48       18

Total = 93 tubes

Groupon price = $300/93 = $3.23

b) Jane's price for each Groupon will be the rent revenue per day divided by the expected number of tubes to rent daily.  The expected number of tubes is derived by multiplying each expected number of tubes by its probability and then summing up the results.

6 0
3 years ago
Sip corp uses no debt. the weighted average cost of capital is 8 percent. if the current market value of the equity is 18 millio
grigory [225]

Since there is no debt, all the capital that the company raises is in the form of common equity.

Since there is only equity (meaning the firm is a fully equity firm), the weighted average cost of capital (WACC) is nothing but the cost of equity

In this case the WACC represents the cost of equity

Therefore, cost of equity = WACC = 8%

6 0
3 years ago
Esmeralda promises to pay fiorello $400 because ""he does not have as much money as other people. "" esmeralda’s promise is not
Butoxors [25]

Esmeralda's promise is not enforceable because society does not want gifts cheapened by making them legally enforceable because society does not want gifts cheapened by making them legally enforceable.

A legally enforceable contract means that you can keep the promise of the other party. If the other party fails or refuses to meet its obligations, the contract can be fulfilled in accordance with the law.

A non-enforceable contract or transaction is valid but not enforced by the court. Unenforceable is typically used in conflict with void (or void ab initio) and voidable. If the parties implement the agreement, it is valid, otherwise, the court will not enforce them.

Learn more about legally enforceable here:brainly.com/question/7306383

#SPJ1

8 0
2 years ago
Inflation is best described as _____.(1 point)
Kryger [21]

Inflation is the situation money is losses some of its value due to general process levels rises in the economy.

  • Hence it can be best be defined as the increase in the amount of money and credit in the economy related to the supply of services and goods.
  • Thus its an upward, general trend of prices in the economy. Hence the option D is correct.

Learn more about the best described as.

brainly.com/question/15588968.

5 0
3 years ago
Read 2 more answers
The Science of Macroeconomics
Yuliya22 [10]

Answer:

Macroeconomics deals with events that affects the entire country or industry as a whole while Microeconomics affects individual members of the economy such as companies and people.

A. Congress recently passed the Tax Cuts and Jobs Act of 2017. MACRO

This Act will affect the entire nation so it will fall under Macroeconomics.

B. Amazon now has a 40% share of all e-commerce revenues. MICRO

Amazon is a single company in the market so things related to it will be considered on a micro economic level.

C. Tuition at the local university increased 11% from last year. MICRO

The local university like Amazon, is a single body in the economy and so they are a microeconomic player.

D. The U.S. unemployment rate fell below 4% in 2018. MACRO

The unemployment rate of a nation relates to the nation as a whole so this will fall under macroeconomics.

3 0
3 years ago
Other questions:
  • A new accountant at Marin Inc. is trying to identify which of the amounts shown below should be reported as the current asset "C
    10·1 answer
  • Sal and Jen went to the store together, and each bought the same car stereo. Sal used a card to make the purchase, and the full
    9·1 answer
  • Which of the following arguments about job analysis is most effective in order to gain the support of top managers? Group of ans
    5·1 answer
  • Loan A has the same original principal, interest rate, and payment amount as Loan B. However, Loan A is structured as an annuity
    6·1 answer
  • Viewing the world through the customer's eyes and constantly seeking ways to create more value for the company enhances: a. the
    10·2 answers
  • On January 15, 2015, Vancey Company paid property taxes on its factory building for the calendar year 2015 in the amount of $960
    12·1 answer
  • Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 2,900 liters in beginnin
    11·1 answer
  • Differences between productive and service orientated profession​
    8·1 answer
  • A(n) _________ is the added value or favorable outcome derived from features of a product or service a seller offers.
    15·1 answer
  • What are the important long-term issues relevant for managing capacity, revenue, and customer satisfaction for southwest airline
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!