Ali Inc. expects to generate free-cash of $350000250000per year forever. If the firm's cost of capital is 0.09 percent, the firm cost of equity capital is 0.19 the market value of debt is $320000, the market value of preferred stock is $175000, and the company has 100000 shares of stock outstanding.

Ali Inc. expects to generate free-cash of $350000250000per year forever. If the firm's cost of capital is 0.09 percent, the firm cost of equity capital is 0.19 the market value of debt is $320000, the market value of preferred stock is $175000, and the company has 100000 shares of stock outstanding.

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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Similar questions

Your firm is considering taking on a project that will result in OCFs of $150,000 per year, forever. Your firm has a 0.85 debt - to - equity ratio. The yield to maturity on bonds is 5%. Corporate tax rate is 30%. The current stock price is $87. The firm has paid dividends of $2.25, $2.50, and $3.55 over the last 3 years and the most recent dividend payment is $3.75. Use the geometric average growth rate to estimate the cost of equity. Since this project is riskier than usual, management will apply an adjustment factor of +2% to the cost of capital for this project. What is the maximum cost of the project for us to accept? Do not round any numbers until the very lastanswer.
Stevenson's Bakery is an all-equity firm that has projected perpetual EBIT of $162,000 per year. The cost of equity is 117 percent and the tax rate is 24 percent. The firm can borrow perpetual debt at 6.4 percent. Currently, the firm is considering taking on debt equal to 72 percent of its unlevered value. What is the firm's levered value? Multiple Choice O O O $1,234,146 $1,164,997 $760,154 $963.199 5844,615
7) see picture
Your company has expected future cash flows of $70 million in perpetuity. The company's WACC is 12.8%. The company has $337 million in debt, and $188 million in excess cash, and 12 million shares. What is the share price of the company?
Cede & Co. expects its EBIT to be $163000 every year forever. The company can borrow at 8 percent. The company currently has no debt and its cost of equity is 10 percent. The tax rate is 23 percent. If the company borrows $185,000 and uses the proceeds to buy back equity, what is the weighted average cost of capital after the recapitalisation is complete? Group of answer choices 9.67% 15.13% 14.32% 8.17%
K Portage Bay Enterprises has 54 million in excess cash, no debt, and is expected to have free cash flow of $15 milion next year Its FCF is then expected to grow at a rate of 2% per year forever. If Portage Bay's equity cost of capital is 13% and it has 6 million shares outstanding, what should be the price of Portage Bay stock? The price of Portage Bay's stock is Sper share (Round to the nearest cent) CITTC
MassGlass Corporation is a firm with $90 million in equity and $20 million in debt. The debt has maturity of 8 years. If we view the equity of this firm as a call option, then we can evaluate this option as one whose exercise price is $____million, whose time to expiration is ____ years, and whose underlying asset has a value of $ ____ million.
The most recent free cash flows of a firm were $15 million. They are expected to grow at a constant rate of 5% forever. The firm has $60 million in debt, $6 million in preferred stock, and $10 million in marketable securities WACC is 10%. The firm has 10 million shares of stock outstanding. What would the market price per share for this firm be? A $23.90 B $27.10 C. $24.90 D.$26.10
am. 123.
RDJ Corp. has expected earnings before interest and taxes (EBIT) of $5,000 (assumed to continue forever). Its unlevered cost of capital is 13.0% and its corporate tax rate is 35%. The company would like to borrow debt that amounts to $2,000 and use the proceeds to buy back shares. This debt has a 7.0% annual interest rate and pays interests annually. What is the firm's cost of equity, after this capital conversion? O A. O B. O C. O E. 10.05% 13.33% 15.14% OD. 13.82% 12.65% B 10 19 28 37 46 Finis
The present value of JECK Co.’s expected free cash flows is $100 million. If JECK has $30 million in debt, $6 million in cash, and 2 million shares outstanding, what is its share price?
The firm is considering increasing its debt by $900,000, using the proceeds to buy back 90,000 shares of stock. what does buy back mean?

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