38. You have forecast the free cash flows to the firm for Permelac Inc., a young and growing company, for the next ten years. You estimate that the cash flows will be negative for the first six years and that you will have to issue 25 million new shares (your estimate) to cover these cash flow needs. You have computed the present value of all of the cash flows, including the terminal value, to be $1.5 billion and you have 100 million shares outstanding today. What is the value per share today? a. $12/share b. $15/share c. $20/share d. $25/share

38. You have forecast the free cash flows to the firm for Permelac Inc., a young and growing company, for the next ten years. You estimate that the cash flows will be negative for the first six years and that you will have to issue 25 million new shares (your estimate) to cover these cash flow needs. You have computed the present value of all of the cash flows, including the terminal value, to be $1.5 billion and you have 100 million shares outstanding today. What is the value per share today? a. $12/share b. $15/share c. $20/share d. $25/share

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 27P

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