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Leno4ka [110]
3 years ago
14

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 $75.0 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?
a. $40.35
b. $41.82
c. $43.33
d. $44.85
e. $46.42
Business
1 answer:
KengaRu [80]3 years ago
8 0

Answer:

C. $43.33

Explanation:

FCF1 = $75.00

Constant growth rate = 5%

WACC = 10%

Total firm value = FCF1/(WACC-g) =$1,500

Value of debt & preferred=$200

Value of equity = $1,300

# of shares = 30

Value per share = equity value /shares =$43.33

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PLEASE HELP!
lidiya [134]

Answer:

C. 3;4

Explanation:

A cover letter is sent together with the resume to a potential employer. It details the job an applicant is applying for and their qualification for the position. The cover letter allows the applicant to elaborate on their skills and experiences in relation to the position sought after.

The cover letter is a perfect way to create an excellent first impression on the employer. It should be about three to four paragraphs long.

5 0
3 years ago
Dee's made two announcements concerning its common stock today. First, the company announced that the next annual dividend will
amid [387]

Answer:

The value of the stock at the given discount rate is $9.5

Explanation:

Here, we are interested in calculating the value of the stock at the given discount rate.

To do this, we employ a mathematical formula;

Value of the stock = Expected dividend ÷ (discount rate-growth rate)

According to the question, we identify the following;

Expected dividend = $1.58

Growth rate(negative) = -1.15% = -1.15/100 = -0.0115

Discount rate = 15.5% = 15.5/100 = 0.155

Plugging these values into the equation, we have;

Value of the stock = 1.58 ÷ (0.155 - (-0.0115)

Value of the stock = 1.58/(0.155 + 0.0115)

Value of the stock = 1.58/0.1665 = $9.5

5 0
3 years ago
Advice from most financial advisers states to spend no more than 28% of one's gross monthly income for one's mortgage payment, a
Lena [83]

Answer and Explanation:

The computation is shown below:

a. For the maximum amount that spend each month on mortgage payment is

= Gross annual income ÷ total number of months in a year × mortgage payment percentage

= $39,600 ÷ 12 months × 28%

= $924

b. . For the maximum amount that spend each month on total credit obligatons

= Gross annual income ÷ total number of months in a year × mortgage payment percentage

= $39,600 ÷ 12 months × 36%

= $1,188

c. Now the maximum amount spend for all other debt is

For monthly mortgage

= $924 × 70%

= $646.8

And, for mortgage debt

= $1,188 × 70%

= $831.60

4 0
3 years ago
A popular, local coffeeshop in one of the suburbs of New York City (NYC) estimates they use 3,500 pounds of coffee annually. The
andre [41]

a) The determination of the optimal size of the order assuming an EOQ model for the local coffee shop is <u>265 pounds</u>.

b) The total cost in the new coffee shop where the demand for coffee increased to 4,000 pounds at an order size of 265 pounds per order (assuming a unit cost of $3 per pound) is <u>$253,500</u>.

<h3>What is the EOQ Model?</h3>

The economic order quantity (EOQ) model calculates the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs.

It is determined using the following model:

EOQ = square root of: 2 (ordering costs)(demand rate) / holding costs.

Thus, the EOQ model can be worked out as follows:

  • Determine the demand units.
  • Determine the ordering cost.
  • Determine the holding cost.
  • Multiply the demand by 2.
  • Then multiply the result by the order cost.
  • Divide the result by the holding cost.

<h3>Data and Calculations:</h3>

a) The annual demand for coffee = 3,500 pounds

Holding cost per pound = $10

Ordering cost = $100

EOQ = square root of: 2 ($100 x 3,500) / $10

= 265 pounds

The annual demand for coffee = 4,000 pounds

Holding cost per pound = $60

Ordering cost = $100

EOQ (Order size) = 265 pounds

Assumed unit cost per pound = $3

The total cost in the new coffee shop = $

Annual holding cost = $240,000 ($60 x 4,000)

Annual ordering cost = $1,500 ($100 x 4,000/265)

Annual purchase cost = $12,000 (4,000 x $3)

Total costs = $253,500

Learn more about the economic order quantity at brainly.com/question/14625177

6 0
2 years ago
The Fish House is expected to pay annual dividends of $1.23 and $1.25 at the end of the next two years, respectively. After that
lorasvet [3.4K]

Answer:

c. $8.05

Explanation:

Calculation to determine What is the value of this stock at a required return of 16.4 percent

First step is to calculate the P2

P2 = ($1.35/.164)

P2= $8.23

Now let calculate the value of the stock

P0 = [$1.23 /1.164] + [($1.25 + 8.23)/1.164^2]

P0 = $8.05

Therefore the value of this stock at a required return of 16.4 percent is $8.05

4 0
2 years ago
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