Use the corporate valuation model to find the intrinsic value of a firm with a long-run growth in FCF of 5.75% and a WACC of 8.12%. The firm has $45 million in debt and preferred stock and has 4.5 million shares of common stock. The FCF for the first 4 years are (in millions of dollars): -$15, $12, $14, $19. A $63.90 B. $84.60 OC. $132.61 OD. $154.33
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- QUESTION 1. The current year profits of Levelex Inc. is 1.000.000₺ and expected profits for thenext year is 1.250.000₺. The average profitability of its assets is 22% and the current year dividend per face valueof 1₺ is 30%.a) Compute the intrinsic value of a stock of this company for an investor whose minimum required rate ofreturn is 25 %. b) Compute the value of this stock under the same assumptions 2 years later.ABC Company's most recent dividend was $40 and its dividends are expected to have a constant growth rate of 5 percent per year. What is the maximum price an investor with a 15% required rate of return would be willing to pay for a share of ABC Company’s common stock? a. $463,05 b. $400 c. $441 d. $420Use the corporate valuation model to find the intrinsic value of a firm with a long run growth in FCF of 5.2% and a WACC of 8.7%. The firm has $15 million in debt and preferred stock and has 4 million shares of common stock. The FCF for the first 4 years are (in millions of dollars): $10, $2, $9, $17.$32.42$40.13$47.89$90.67
- Question 21 As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D 0 = $0.80; P 0 = $22.50; and g L = 8.00% (constant). Based on the dividend growth model, what is the cost of common from reinvested earnings? a. 11.25% b. 10.69% c. 11.84% d. 12.43% e. 13.05% Muscarella Inc. has the following balance sheet and income statement data: Cash $ 14,000 Accounts payable $ 42,000 Receivables 70,000 Other current liabilities 28,000 Inventories 210,000 Total CL $ 70,000 Total CA $294,000 Long-term debt 70,000 Net fixed assets 126,000 Common equity 280,000 Total assets $420,000 Total liab. and equity $420,000 Sales $280,000 Net income $ 21,000 The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70,…QUESTION 1. a) Newdeal Inc. follows a policy of distributing 45% of its profits and investing the rest in the operations of the company. The average profitability of its assets is 20% and the current year dividend per face value of 1t is 30%. Compute the intrinsic value of a stock of this company for an investor whose minimum required rate of return is 25%. b) Compute the value of this stock one year later under the same assumptions.West Tech Inc. has an expected dividend next year of $3.20 per share, a growth rate for dividends of 8 percent, and a required return of 15 percent. What is the value of a share of West Tech's common stock? a.$40.00 b.$27.83 c.$45.71 d.$21.33
- Q-r Net income for the previous year was $400,000, of which $280,000 was paid out in dividends. Dividends are expected to grow at a constant rate. The company has 200,000 shares outstanding and the book value of equity is $4,000,000. The appropriate P/E ratio for this type of company is 8. What is the expected stock price 5 years from now?The current book value per share of B.L. Black & Sons is $4.5 and the required return on the stock is 10 percent. The firm expects earnings per share of $2.5 next year with annual earnings growth of 4 percent. What is the current market value of this stock? a. $9.16 b. $18.27 c. $13.88 d. $38.67 e. $10.91J Pinkman Motors paid a dividend of $ 3.75 last year. If J Pinkmans return on equity is 24% and its retention rate is 25%, what is the value of the common stock if investors require a 20% rate of return? a. $ 38.39 b. $18.39 c. $82.39 d. $ 28.39
- Credenza Industries is expected to pay a dividend of $1.50 at the end of the coming year. It is expected to sell for $61 at the end of the year. If its equity cost of capital is 9%, what is the expected capital gain from the sale of this stock at the end of the coming year? .... O A. $57.34 O B. $5.04 OC. $55.96 O D. $3.66 ..QUESTION 6 : Net profit of Harper Holding Ltd in the current year is $3,546,000. The company is planning to launch a project that will requires an investment of $1,045,000 next year. Today the company's stock has market value of $72/share. Harper Holding Ltd has the current capital structure of 65% in equity and 35% in debt. Required: a. How much dividend can Harper Holding Ltd pay its shareholders this year and what is dividend payout ratio of the company. Assume the Residual Dividend Payout Policy applies. b. The company is paying a cash dividend of $5.50/share plus an extra-cash dividend of $2.5/share. Tomorrow the stock will go ex-dividend. Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%? c. M&T Ltd. is a daughter company of the Harper Holding and currently under a liquidation plan due to severe business contraction. The company plans to pay total dividend of $8.5 million now and $ 12.5 million one year from now as a liquidating dividend. The…Constamt urowtl ASset valuauon ти ויקסדד 10. A company plans to pay a dividend of $3.20 exactly one year from today and grow the dividend at a constant rate of 3% per year, indefinitely. Further, the return required by shareholders is 14%. According to the Gordon Model, what is the price of this firm's common stock? Topic с D1 k-g Value Do (1+g) k g