ollowing information: · Current FCFF $745 million · Outstanding shares 309.39 million · Equity beta 0.90, · risk-free rate 5.04 percent; · equity risk premium 5.5 percent · Cost of debt 7.1 percent · Marginal tax rate 34 percent · Capital structure 20 percent debt, 80 percent equity · Long-term debt $1.518 billion · Growth rate of FCFF - 8.8 percent annually in stage 1, years 1–4 - 7.4 percent in year 5, - 6.0 percent in year 6, - 4.6 percent in year 7 - 3.2 percent in year 8 and thereafter From the information that Jones has accumulated, estimate the following: d) Total value of equity. e) Value per share.
Charles Jones is evaluating Reliant Home Furnishings by using a three-stage growth model. He has accumulated the following information:
· Current FCFF $745 million
· Outstanding shares 309.39 million
· Equity beta 0.90,
· risk-free rate 5.04 percent;
· equity risk premium 5.5 percent
· Cost of debt 7.1 percent
· Marginal tax rate 34 percent
· Capital structure 20 percent debt, 80 percent equity
· Long-term debt $1.518 billion
· Growth rate of FCFF
- 8.8 percent annually in stage 1, years 1–4
- 7.4 percent in year 5,
- 6.0 percent in year 6,
- 4.6 percent in year 7
- 3.2 percent in year 8 and thereafter
From the information that Jones has accumulated, estimate the following:
d) Total value of equity.
e) Value per share.
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