A firm is expected to have free cash flows of $50 million this year (FCF1=$50m). Free cash flows are expected to grow by 6% per year. For a firm whose WACC is 12%, what is the value of a share of common stock if the firm has $500 million of total debt, no preferred stock, and 8 million common shares outstanding?

A firm is expected to have free cash flows of $50 million this year (FCF1=$50m). Free cash flows are expected to grow by 6% per year. For a firm whose WACC is 12%, what is the value of a share of common stock if the firm has $500 million of total debt, no preferred stock, and 8 million common shares outstanding?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The analyst estimates that after three years the National Inc’s free cash flow will grow at a constant rate of 6% per year. The analyst estimates that the company’s WACC is 10%. The total market value of debt and preferred stock is P25,000 and there are 1,000 outstanding shares of common stock. What is the intrinsic value of the company’s common stock? a. P99.50 b. P84.34 c. P75.31 d. P112.22
The Notre dame Explorers company is expected to pay dividends that will grow at a 21% rate from year 1 to year 4, with the growth rate declining to a constant 2% from year 5 onwards. Dividends are paid annually. The discount rate is 10% and the company just paid a $5.10 dividend. What is the current intrinsic price of the stock for this firm?
Emit Corporation has just paid an annual dividend of $1.00. Analysts expect this dividend to grow at 10% per year indefinitely. According to dividend discount model (DDM) what is the value a share of Emit stock if the firm's equity cost of equity 18%?
Baghiben
Scampini Technologies is expected to generate $50 million in free cash flow next year, and FCF is expected to grow at a constant rate of 6% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 14%. If Scampini has 45 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent. Each share of common stock is worth $ , according to the corporate valuation model.
A firm pays out all earnings in dividends. The firm just paid a $1 dividend. The dividend is expected to grow at a rate of 10% per year for the next 3 years. Afterwards, the dividend is expected to grow at a rate of 4% per year forever. If the cost of stock is 14% what is the stock price?
Scarab Technologies is expected to generate $175 million in free cash flow next year, and FCF is expected to grow at a constant rate of 7% per year indefinitely. Scarab has no debt or preferred stock, and its WACC is 10%. If Scarab has 45 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent. How much is each share of common stock is worth dollars, according to the corporate valuation model?
Assume that the average firm in C&J Corporation's industry is expected to grow at a constant rate of 4% and that its dividend yield is 8%. C&J is about as risky as the average firm in the industry and just paid a dividend (DO) of $2. Analysts expect that the growth rate of dividends will be 50% during the first year (g0,1 = 50%) and 20% during the second year (g1,2 = 20%). After Year 2, dividend growth will be constant at 4%. What is the required rate of return on C&J's stock? What is the estimated intrinsic price per share? Do not round intermediate calculations. Round the monetary value to the nearest cent and percentage value to the nearest
You anticipate that Liebendauer Enterprises (ticker: LBE) will have earnings per share of $3 this year. Furthermore, you expect that they will pay out $2.25 of these earnings to shareholders in the form of a dividend at the end of this year. You estimate that LBE's return on new investments is 16% and their equity cost of capital is 13%. Your expected growth rate for LBE's dividends will be closest to: OA. 4% OB. 3.3% OC. 1.6% OD. 2.4%
ACME, Inc. forecasts that it will have the free cash flows shown below. The free cash flows are expected to grow by 4% per year after year 3. Year 1 23 FCF (S million) 20 48 54 The weighted average cost of capital is 11%. The firm has $40 million of debt and 10 million shares outstanding. What is a good estimate of ACME's share price? O $55.25 $27.30 $60.70 $38.55
Suppose Watch-Over-Ya Corp's projected free cash flow for next year is FCF1 = $500,000 and FCF is expected to grow at a constant rate of 5.0% per year indefinitely. Watch-Over-Ya has no debt or preferred stock, and its weighted average cost of capital (WACC) is 8.2%. It has 200,000 shares outstanding What is the stock’s value per share?
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