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
IgorC [24]
2 years ago
8

For a firm, analysts project the following free cash flows during the next 3 years, after which FCF is expected to grow at a con

stant 5% rate. The company's WACC is 11%. Now suppose the same company has $112.60 million of debt and 25 million shares of stock outstanding. What is your estimate of the CURRENT price per share. Year 0
Business
1 answer:
Llana [10]2 years ago
6 0

Answer:

the three next cash flows are missing, so I looked for similar questions and found:

  • FCF1 = $20 million
  • FCF2 = $25 million
  • FCF3 = $30 million

in order to determine the company's value, we must first determine the horizon value in 3 years:

horizon value in year 3 = [$30 million x (1 + 5%)] / (11% - 5%) = $31.50 million / 6% = $525 million

the current value of the firm = $20/1.11 + $25/1.11² + $30/1.11² + $525/1.11³ = $18.02 + $20.29 + $21.94 + $383.88 = $444.13 million

the value of equity = $444.13 - $112.60 = $331.53 million

price per stock = $331.53 million / 25 million = $13.26 per stock

You might be interested in
Privacy protection in the united states is ________ in europe.
Rus_ich [418]
<span>Privacy protection in the United states is much less stringent than in Europe.

Stringent is another word for strict. European privacy protection laws are much more strict than those in the United States. Privacy protection refers to the means of protecting your privacy and companies are not allowed to give out personal </span>information without confirmation they are allowed to do so. 
7 0
3 years ago
After setting the pricing objective, the next step in Amy's price-setting process is to:_______. a) monitor the effectiveness of
lakkis [162]

Answer:   Evaluate demand

After setting the pricing objective, the next step in Amy's price-setting process is to evaluate demand

Explanation:

4 0
3 years ago
"Clauss Company transfers out 14,000 units and has 2,000 units of ending work in process that are 25% complete. Materials are en
diamong [38]

Answer:

a. $112,000

b.    $7,500

Explanation:

(a) transferred out

Units transferred out are 100% complete for both materials and conversion costs, thus multiply the Total Cost per Equivalent units with the number of units transferred.

Cost of units transferred out = $8 × 14,000 units

                                               = $112,000

(b) in ending work in process

Units of ending work in process are 100% complete in terms of materials ( since materials are entered at the beginning of the process) whilst 25% complete in terms on conversion cost (applied uniformly during production).

Cost of ending work in process

Materials ($3 × 2,000 units)                  = $6,000

Conversion ($3 × (2,000 units × 25%)) =  $1,500

Total Cost                                               = $7,500

6 0
3 years ago
Naomi has just arrived for her first day at work at GloboTech, a large technology company. The first thing the hiring manager, E
Anna11 [10]

Answer:

orientation is the correct answer.

Explanation:

5 0
3 years ago
Item 15Item 15 Gee-Gee's is going to pay an annual dividend of $2.05 a share next year. This year, the company paid a dividend o
meriva

Answer:

$27.33

Explanation:

For computing the one share of the common stock after six years from now first, we have to determine the price of the common stock which is shown below

Price of the common stock = Next year dividend ÷ (Required rate of return - growth rate)

= $2.05 ÷ (11.2% - 2.50%)

= $23.56

The growth rate is

= ($2.05 - $2) ÷ ($2)

= 2.50%

Now the one share of the common stock after six years is

= $2 × 1.025^7 ÷ (11.2% - 2.50%)

= 2.3773715073  ÷ 8.7%

= $27.33

6 0
3 years ago
Other questions:
  • Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $6
    7·1 answer
  • Suppose a​ seven-year, $ 1 comma 000 bond with a 7.8 % coupon rate and semiannual coupons is trading with a yield to maturity of
    5·1 answer
  • Andy worked weekends for a month to complete a difficult project. he hoped that he would receive a raise if he successfully comp
    15·1 answer
  • Sixth fourth bank has an issue of preferred stock with a $6.10 stated dividend that just sold for $123 per share. what is the ba
    12·1 answer
  • Which of the following statements is correct?
    7·1 answer
  • Which type of consumer products are frequently purchased with little​ planning, little comparison or shopping​ effort, and low c
    12·2 answers
  • If 25 consecutive tosses of a fair coin have all been heads, some individuals tend to think that the next one "must be heads." T
    14·1 answer
  • Nagle​ Electric, Inc., of​ Lincoln, Nebraska, must replace a robotic Mig welder and is evaluating two alternatives. Machine A ha
    13·1 answer
  • Executives of Studio Recordings, Inc., produced the latest compact disk, the Starshine Sisters Band, titled Starshine/Moonshine.
    12·1 answer
  • 3. Based on sales, what products do customers want? How accurately did the
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!