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A company just reported the following results for its most recent fiscal year: Total revenues: $529 million, operating profit margin: 34%, tax rate: 20%, reinvestment rate: 65%. It has $100 million debt and $30 million cash. Number of shares outstanding is 50 million. You forecast that the company's FCFF will grow 8% per year over the next 2 years, and at a stable 2.4% rate in perpetuity thereafter. You estimate that the company's cost of capital is 11 %. How much would you be willing to pay for each share? Round to the nearest cent.

A company just reported the following results for its most recent fiscal year: Total revenues: $529 million, operating profit margin: 34%, tax rate: 20%, reinvestment rate: 65%. It has $100 million debt and $30 million cash. Number of shares outstanding is 50 million. You forecast that the company's FCFF will grow 8% per year over the next 2 years, and at a stable 2.4% rate in perpetuity thereafter. You estimate that the company's cost of capital is 11 %. How much would you be willing to pay for each share? Round to the nearest cent.

Essentials Of Investments
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
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A company just reported the following results for its most recent fiscal year: Total revenues: $529 million, operating profit margin: 34%, tax rate: 20%, reinvestment rate: 65%. It has $100 million debt and $30 million cash. Number of shares outstanding is 50 million. You forecast that the company's FCFF will grow 8% per year over the next 2 years, and at a stable 2.4% rate in perpetuity thereafter. You estimate that the company's cost of capital is 11 %. How much would you be willing to pay for each share? Round to the nearest cent.
Transcribed Image Text:A company just reported the following results for its most recent fiscal year: Total revenues: $529 million, operating profit margin: 34%, tax rate: 20%, reinvestment rate: 65%. It has $100 million debt and $30 million cash. Number of shares outstanding is 50 million. You forecast that the company's FCFF will grow 8% per year over the next 2 years, and at a stable 2.4% rate in perpetuity thereafter. You estimate that the company's cost of capital is 11 %. How much would you be willing to pay for each share? Round to the nearest cent.
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