Your company has expected future cash flows of $70 million in perpetuity. The company's WACC is 12.8%. The company has $337 million in debt, and $188 million in excess cash, and 12 million shares. What is the share price of the company?

Your company has expected future cash flows of $70 million in perpetuity. The company's WACC is 12.8%. The company has $337 million in debt, and $188 million in excess cash, and 12 million shares. What is the share price of the company?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

See similar textbooks

Related questions

Q: What is the current value per share?

A: The current value per share means the price of share prevailing in the market. The discount rate is…

Q: Derry Corporation is expected to have an EBIT of $2,800,000 next year. Increases in depreciation,…

A: The stock price shows only the current or market worth of a corporation. As a result, the price…

Q: Stay Swift Corp. has an expected net operating profit after taxes, EBIT(1 T), of $14,700 million in…

A: Hi student Since there are multiple questions, we will answer only first question. Free cash flows…

Q: Suppose you are valuing a company that is growing its free cash flows at a stable 1.6% annual rate…

A: In this problem we have to calculate present value of cash flow and find out value of equity.

Q: Chittenden Enterprises has 632 million shares outstanding. It expects earnings at the end of the…

A: Current share price can be calculated by using dividend discount model. In this model present value…

Q: Analysts predict that Burks Corporation will have free cash flows (FCFs) of negative $20 million at…

A: WACC is 11% Net Debt is $30million Stocks outstanding is 3 milllion To Find: current price per…

Q: Little Oil has outstanding 1 million shares with a total market value of $27 million. The firm is…

A: a) Total market capitalization = $27 million, Number of shares issued = 1 million Price per share =…

Q: Wazir Ali Corporation expects next year’s net income to be $15 million. The firm’s debt ratio is…

A: Residual dividend policy is the policy in which the earnings of the company are first used for the…

Q: Harper Industries has $900 million of common equity on its balance sheet, its stockprice is $80 per…

A: Computation:

Q: JJ industries has $450 million of common equity on its balance sheet, its stock price is $40 per…

A: To run the business, firm arrange the funds from different sources by issuing securities. Common…

Q: Zoom Enterprises expects that one year from now it will pay a total dividend of $4.6 million and…

A: given, forever dividend = $9.2 million r=13.3% outstanding shares = 4.8 million

Q: Zoom Enterprises expects that one year from now it will pay a total dividend of $4.6 million and…

A: Total amount to be spent on dividends and repurchase forever (A) = $9.2 million Cost of capital (r)…

Q: AFW Industries has 182 million shares outstanding and expects earnings at the end of this year of…

A: We need to use constant growth model to calculate stock price. The formula is Share Price(P0) =D1r-g…

Q: eavy Metal Corporation is expected to generate the following free cash flows over the next five…

A: Enterprise value will be the sum of present value all free cash flows and present value of terminal…

Q: A firm has 41 million shares outstanding with a current share price of $4.30 The firm has a…

A: Calculation of Enterprise Value Enterprise value = Market Capitalization + Outstanding debt – Cash…

Q: A company has $6 billion of net income, $2 billion of depreciationand amortization, $80 billion of…

A: Given data; Net income = $6 billion Depreciation and amortization = $2 billion common equity = $80…

Q: MacJolly Corporation is expecting a cash flow of P3,000,000 next year and it is expected to…

A: The value of the company refers to the present value of free cash flows that are expected to be…

Q: Pearl Corp. is expected to have an EBIT of $2,400,000 next year. Depreciation, the increase in net…

A: Let us first calculate the firm value of Pearl Corp. The firm value is equal to sum of the present…

Q: A firm has 10 million shares outstanding with a market price of P20 per share. The firm has P25…

A: Given, Outstanding Shares = 10 million or 10,000,000 Market Value Per Share = P20 per…

Q: A company has a current value of operations of $800 million,and it holds $100 million in short-term…

A: Given information: Current value of operations of company is $800 million, Short term investments is…

Q: Flo Company has just paid a cash dividend of $2.50 per share. If dividends are expected to grow at a…

A: Solution: With Dividend Growth Model: Dividend are expected to grow at a constant rate per period,…

Q: AFW Industries has 201 million shares outstanding and expects earnings at the end of this year of…

A: The mathematical equation for computing the value is: Values in $million

Q: Pearl Corp. is expected to have an EBIT of $1,900,000 next year. Depreciation, the increase in net…

A: Given information: EBIT is $1,900,000 Depreciation is $160,000 Net working capital is $80,000…

Q: Suppose you are valuing a company that is growing its free cash flows at a stable 2.4% annual rate…

A: Free cash how next year FcF1 =$162 million growth rate g=2.4% cost of capital=9.8% =firm value=Fc…

Q: Zoom Enterprises expects that one year from now it will pay a total dividend of $5.1 million and…

A: Repurchase of shares from investors and paying dividends to investors will have same effect to…

Q: If the Stanford Corporation's net income is $200 million, its common equity is $833 million, and…

A: A maximum growth rate at which a company can sustain itself without raising additional funds from…

Q: Free cash flow to firm for JC de Vera Corporation is currently $300,345,800.00 but is expected to…

A: The question is related to Value of Business. The detaiks are given. The question will be solved by…

Q: MNO Oil has assets with a market value of $600 million, $64 million of which are cash. It has debt…

A: Stock price is the amount at which a security (or stock) is being traded in the stock exchange…

Q: g Nike's stock price is $68 per share, shares outstanding are $1,600 million, and the company…

A: Company need money and they can raise from the market by issue of new shares but how many shares to…

Q: Valence Electronics has 213 million shares outstanding. It expects earnings at the end of the year…

A: Companies have different alternatives to invest their money in, but they should always compare the…

Q: Scampini Technologies is expected to generate $175 million in free cash flow next year, and FCF is…

A: Corporate Valuation Models deals with computation of value of a corporate or business entity with…

Q: Anle Corporation has a current price of $13, is expected to pay a dividend of $2 in one year, and…

A: Answer: 1. Calculation of Anle's expected dividend yield: Formula, Expected dividend yield =…

Q: A firm earns $60 billion in profits and pays $45 billion in dividends for the year. The firm has 3…

A: Dividend Payment to common stockholders = Total dividend paid - Dividend Payment to Preferred…

Q: TJ's has a market value equal to its book value. Currently, the firm has excess cash of $218,500,…

A: Given:

Q: Scarab Technologies is expected to generate $175 million in free cash flow next year, and FCF is…

A: Free cash flow next year = 175 million Growth rate = 7% WACC=10% Share outstanding = 45million

Q: A firm earns $895 million in profits and pays $626 million in dividends for the year. The firm has…

A: Number of common shares = 390 million Number of preferred shares = 135 million Preferred dividend =…

Q: Based on a discounted free cash flow method, you have estimated the value of a firm to be $270…

A: In free cash flow valuation model, intrinsic value of a company is equal to the present value of its…

Q: Storico Co just paid a dividend of $315 per share. The company will increase its dividend by 20…

A: Dividend at 0th time, D0 = 3.15/share Dividend for next year, D1 =3.15*(1+20%) =3.78 Dividend for…

Q: A firm has a market value equal to its book value. Currently, the firm has excess cash of $7,000 and…

A: Market Value = Book Value Excess Cash = 7000 Other Assets = 21000 Equity = 28000 Number of shares…

Q: Keraz Inc. has recently reported a Free Cash Flow (FCF) of $21.5 million. The CFO expects that FCF…

A: The question is based on the concept of valuation of project based on the constant growth model.…

Q: Pearl Corp. is expected to have an EBIT of $2,000,000 next year. Depreciation, the increase in net…

A: The question is based on the concept of discounting of free cash flow in the company operation. The…

Q: An all-equity financed company currently has $300 million in excess cash. -200 million shares…

A: Given Information: Excess cash=$300 million Number of shares outstanding=200 million Market price…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Calculation of enterprise value

VIEW

Step 2: Equity value calculation

VIEW

Step 3:Share price of the company

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

The present value of JECK Co.’s expected free cash flows is $100 million. If JECK has $30 million in debt, $6 million in cash, and 2 million shares outstanding, what is its share price?
The present value of JECK Co.'s expected free cash flow is $101 million. If JECK has $30 million in debt, $4 million in cash, and 2.8 million shares outstanding, what is its share price? The company's share price is $ (Round to the nearest cent.)
You expect X-Co will pay a dividend of $76 million and repurchase $100 million of its common shares next year (Year 1) with both expected to grow 8% in Year 2 and 6% in Year 3. If you expect the company to be sold for $12 billion at the end of Year 3, and you have calculated the cost of equity to be 8.4%, what do you estimate the true value of the company’s net worth to be now? (First draw a timeline. Assume all cash flows are at the end of the year.)
A company has a current value of operations of $800 million,and it holds $100 million in short-term investments. If thecompany has $400 million in debt and has 10 million commonshares outstanding, what is the estimated price per share?($50.00
Krell Industries has a share price of $22.35 today. If Krell is expected to pay a dividend of $0.84 this year and its stock price is expected to grow to $24.51 at the end of the year, what is Krell's dividend yield and equity cost of capital? The dividend yield is 3.8%. (Round to one decimal place.) The capital gain rate is 13.42 %. (Round to one decimal place.)
Based on a discounted free cash flow method, you have estimated the value of a firm to be $270 million. The company has $110 million of long-term debt outstanding (common equity comprises the rest). There are 14.0 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock?
Beta Corporation’s current stock price is $90 and total number of shares is 1 billion. The company will generate free cash flow of $10 billion for the year ahead, all of which it will payout to its shareholders as a dividend. What would be the price at the ex dividend date? (SHOW YOUR WORK)
Krell Industries has a share price of $22.79 today. If Krell is expected to pay a dividend of 1.19% this year and its stock price is expected to grow to 23.33% at the end of the year, what is Krell's dividend yield and equity cost of capital? The dividend yield is _____%. (Round to one decimal place.)
Krell Industries has a share price of $21.81 today. If Krell is expected to pay a dividend of $1.18 this year and its stock price is expected to grow to $24.71 at the end of the year, what is Krell's dividend yield and equity cost of capital? The dividend yield is%. (Round to one decimal place.)
Krell Industries has a share price of $21.52 today. If Krell is expected to pay a dividend of $0.67 this year, and its stock price is expected to grow to $23.54 at the end of the year, what is Krell's dividend yield and equity cost of capital?
XYZ has an expected Free Cash Flow of $109M next year and will remain the same in perpetuity. It has a WACC of 8%. The Company has Short term investment amounting to $104M. The Company has Preferred stock of $50M, Debt of $97M and 110M of common stock outstanding. What is the intrinsic value of its common stock?
Krell Industries has a share price of $22.32 today. If Krell is expected to pay a dividend of $1.07 this year and its stock price is expected to grow to $23.71 at the end of the year, what is Krell's dividend yield and equity cost of capital? a) The dividend yield is ______%. (Round to one decimal place.) b) Capital Gain Rate_____ c) The total return ____%