43. ABC Company is expected to generate P150 million in free cash flow next year, and it is expected to grow at a constant rate of 5% per year indefinitely. ABC has no debt or preferred stock, and its WACC is 10%. If ABC has 50 million shares of stock outstanding, what is the stock's value per share? [nearest peso
43. ABC Company is expected to generate P150 million in free cash flow next year, and it is expected to grow at a constant rate of 5% per year indefinitely. ABC has no debt or preferred stock, and its WACC is 10%. If ABC has 50 million shares of stock outstanding, what is the stock's value per share? [nearest peso
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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Question
![43. ABC Company is expected to generate P150 million in free cash flow next
year, and it is expected to grow at a constant rate of 5% per year indefinitely.
ABC has no debt or preferred stock, and its WACC is 10%. If ABC has 50 million
shares of stock outstanding, what is the stock's value per share? [nearest peso]
48. ABC Company wants to estimate next year's return on equity ROE based on
debt ratio of 10% and interest rate of 9%. The company's total assets are P14
million, it currently uses only common equity and tax rate is 40%. The CFO
estimated next year's EBIT as follows : P4.2 million with a 20% probability, P 2.8
million with a 50% probability, and P 700,000 with a 30% probability. Based on
the above probabilities, the return on equity is determined to be 11.11% and the
coefficient variation is 0.541. What is the standard deviation? [nearest percent]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F79b9f846-1223-444e-b6e8-6b393cc59d9d%2F35a3501d-4684-486b-a646-6688f1078996%2Fxmg63em_processed.png&w=3840&q=75)
Transcribed Image Text:43. ABC Company is expected to generate P150 million in free cash flow next
year, and it is expected to grow at a constant rate of 5% per year indefinitely.
ABC has no debt or preferred stock, and its WACC is 10%. If ABC has 50 million
shares of stock outstanding, what is the stock's value per share? [nearest peso]
48. ABC Company wants to estimate next year's return on equity ROE based on
debt ratio of 10% and interest rate of 9%. The company's total assets are P14
million, it currently uses only common equity and tax rate is 40%. The CFO
estimated next year's EBIT as follows : P4.2 million with a 20% probability, P 2.8
million with a 50% probability, and P 700,000 with a 30% probability. Based on
the above probabilities, the return on equity is determined to be 11.11% and the
coefficient variation is 0.541. What is the standard deviation? [nearest percent]
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