Portage Bay Enterprises has $2.5 million in excess cash, no debt, and is expected to have free cash flow of $10.5 million next year. Its FCF is then expected to grow at a rate of 4.5% per year forever. If Portage Bay's equity cost of capital is 8% and it has 9 million shares outstanding, what should be the price of Portage Bay stock?

Milton Inc. is an all-equity firm and investors expect it to remain an all-equity firm in the future. It has 100 million shares outstanding and is subject to a 40% corporate tax rate. It has no excess cash. The cost of equity is 20%. The firm is expected to generate free cash flows of $100 million per year forever, with the first free cash flow coming exactly one year from now (in December 2020). (a) What is the current stock price of Milton Inc.?  Suppose that today, Milton Inc. makes a surprise announcement that it will issue $200 million worth of perpetual debt (i.e., it will maintain a constant debt level of $200 million forever) with coupon rate 8%, which coincides with its cost of debt. Milton will use the proceeds from the issuance of debt to repurchase stocks. Assume that the recapitalization will take place very soon, within a few days. (b) What will be the total value of the firm after the recapitalization described above? (c) What will be the total value of equity (i.e., the…

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.)

Summit Systems will pay a dividend of $1.52 this year. If you expect Summit's dividend to grow by 6.7% per year, what is its price per share if the firm's equity cost of capital is 11.8% ? The price per share is $ (Round to the nearest cent.).