A company is projected to generate free cash flows of $329 million next year, growing at a 5.7% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.1%. The company's cost of capital is 13.3%. The company owes $171 million to lenders and has $37 million in cash. If it has 114 million shares outstanding, what is your estimate for its share value? Round to one decimal place.

A company is projected to generate free cash flows of $329 million next year, growing at a 5.7% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.1%. The company's cost of capital is 13.3%. The company owes $171 million to lenders and has $37 million in cash. If it has 114 million shares outstanding, what is your estimate for its share value? Round to one decimal place.

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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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 value of its operation?
Management wants to evaluate the projected share price for Froggy Toy Frogs, Inc. based on the projected future cash flows of the company. These cash flows are outlined below. The company anticipates a 6% growth rate per year after the 5th year, and has a weighted average cost of capital of 10%. The company has no excess cash, debt of $200 million, and 25 million shares outstanding. Use the discounted free cash flow model to determine the share price for Froggy Toy Frogs, Inc. Year 1 2 3 4 5 Free Cash Flow(Millions) 52 59 65 70 82 Using this information:• What is the terminal enterprise value of the company?• Using the terminal enterprise value, what is the current, present value of the company?
Amiga Corporation has just paid an annual dividend of $1.45. Analysts are predicting a 10.0% per year growth rate in earnings over the next 6 years. After that, Amiga's earnings are expected to grow at the current industry average of 4.2% per year. Assume that Amiga's cost of equity capital is 8.4% per year and that its dividend payout ratio will remain constant for the foreseeable future. What price does the dividend-discount model predict Amiga shares should currently sell for? The value of Amiga Corporation's shares is $$(Round your answer to the nearest cent)
CX Enterprises has the following expected dividends: $1.11 in one year, $1.19 in two years, and $1.28 in three years. After that, its dividends are expected to grow at 3.9% per year forever (so that year four's dividend will be 3.9% more than $1.28 and so on). If CX's equity cost of capital is 12.3%, what is the current price of its stock? The price of the stock will be $. (Round to the nearest cent.)
CX Enterprises has the following expected dividends $1.09 in one year, $1.23 in two years, and $1.34 in three years After that, its dividends are expected to grow at 4.3% per year forever (so that year 4's dividend will be 4.3% more than 1.34 and so on). If CX's equity cost of capital is 11.5%, what is the current price of its stock? The price of the stock will be $ (Round to the nearest cent.)
National Corporation expects to generate free-cash flows of P300,000 per year for the next five years. Beyond that time, free cash flows are expected to grow at a constant rate of 5 percent per year forever. If the firm's average cost of capital is 15 percent, the market value of the firm's debt is P500,000, and National Corporation has a half million shares of stock outstanding, what is the value of National Corporation's stock? Format: 1.11
CX Enterprises has the following expected dividends: $1.02 in one year, $1.17 in two years, and $1.27 in three years. After that, its dividends are expected to grow at 3.6% per year forever (so that year 4's dividend will be 3.6% more than $1.27 and so on). If CX's equity cost of capital is 11.8%, what is the current price of its stock? The price of the stock will be $ (Round to the nearest cent.)
CX Enterprises has the following expected dividends: $1.15 in one year, $1.23 in two years, and $1.29 in three years. After that, its dividends are expected to grow at 3.9% per year forever (so that year 4's dividend will be 3.9% more than $1.29 and so on). If CX's equity cost of capital is 11.7%, what is the current price of its stock? (Round to the nearest cent.)
Summit Systems will pay a dividend of $1.55 this year. If you expect Summit's dividend to grow by 5.5% per year, what is its price per share if the firm's equity cost of capital is 10.9%? The price per share is $. (Round to the nearest cent.)
Oranda Corp. has 1 million shares of stock outstanding. Oranda has a target capital structure with 60% equity and 40% debt. The company projects net income of P5 million and investment projects requiring P6 million in the upcoming year. QUESTION::a. Oranda uses the residual distribution model and pays all distributions in the form of dividends. What is the projected DPS? b. What is the projected payout ratio?
Suppose that Shopify Inc. (SHOP) is selling for $36.00. Analysts believe that the growth rate for SHOP will be 30% per year for the next four years, 15% per year for the following two years, and thereafter the growth rate will be 8% indefinitely. SHOP’s most recent cash dividend per share was $3.00. The dividend will grow by the same rate as the company. Stockholders require a return of 20 percent on SHOP’s common stock. Required: Based on the above assumptions, determine the price of SHOP’s common stock. Explain whether an investor should buy the stock.
Summit Systems will pay a dividend of $1.48 this year. If you expect Summit's dividend to grow by 5.8% per year, what is its price per share if the firm's equity cost of capital is 11.3%? The price per share is $ (Round to the nearest cent.)

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