Analysts project the FIN340 Company's upcoming 5 years of (undiscounted) cash flow is as follows:Projected(Undiscounted)Future CashFlows$3,900,000$4,056,000$4,218,240$4,386,970$4,562,449Year 1Year 2Year 3Year 4Year 5Other key assumptions regarding the FIN340 Company are provided below:• The annual cash flow growth rate assumed in the above projections is 4.0%/year.•The FIN340 Company's terminal value (value of all cash flows in year 6 & beyond) is projected at 2.0times the discounted value of Year 5 cash flow.The discount rate (required rate of return) for the FIN340 Company is 8.0%.The FIN340 Company has 1,100,000 shares outstanding.• The company carries no debt and is fully financed with equity.Using the Discounted Cash Flow (DCF) Model, calculate the fair market value per share for the FIN340Company stock (in other words, the maximum price an investor would be willing to pay per share).A. $3.55B. $60.68OC. $20.89D. $19.20OE. $15.24

Analysts project the FIN340 Company's upcoming 5 years of (undiscounted) cash flow is as follows: Projected (Undiscounted) Future Cash Flows $3,900,000 $4,056,000 $4,218,240 $4,386,970 $4,562,449 Year 1 Year 2 Year 3 Year 4 Year 5 Other key assumptions regarding the FIN340 Company are provided below: • The annual cash flow growth rate assumed in the above projections is 4.0%/year. . The FIN340 Company's terminal value (value of all cash flows in year 6 & beyond) is projected at 2.C times the discounted value of Year 5 cash flow. The discount rate (required rate of return) for the FIN340 Company is 8.0%. The FIN340 Company has 1,100,000 shares outstanding. The company carries no debt and is fully financed with equity. Using the Discounted Cash Flow (DCE) Model, calculate the fair market value per share for the FIN340 Company stock (in other words, the maximum price an investor would be willing to pay per share). A. $3.55 B. $60.68 OC. $20.89 D. $19.20 E. $15.24

Analysts project the FIN340 Company's upcoming 5 years of (undiscounted) cash flow is as follows: Projected (Undiscounted) Future Cash Flows $3,900,000 $4,056,000 $4,218,240 $4,386,970 $4,562,449 Year 1 Year 2 Year 3 Year 4 Year 5 Other key assumptions regarding the FIN340 Company are provided below: • The annual cash flow growth rate assumed in the above projections is 4.0%/year. . The FIN340 Company's terminal value (value of all cash flows in year 6 & beyond) is projected at 2.C times the discounted value of Year 5 cash flow. The discount rate (required rate of return) for the FIN340 Company is 8.0%. The FIN340 Company has 1,100,000 shares outstanding. The company carries no debt and is fully financed with equity. Using the Discounted Cash Flow (DCE) Model, calculate the fair market value per share for the FIN340 Company stock (in other words, the maximum price an investor would be willing to pay per share). A. $3.55 B. $60.68 OC. $20.89 D. $19.20 E. $15.24

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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Quantitative Problem 1: Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating income [EBIT(1-T)] will be $400 million and its 2020 depreciation expense will be $60 million. Barrington's 2020 gross capital expenditures are expected to be $120 million and the change in its net operating working capital for 2020 will be $25 million. The firm's free cash flow is expected to grow at a constant rate of 5.5% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 8.1%; the market value of the company's debt is $2.85 billion; and the company has 190 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Also, the firm has zero non-operating assets. Using the corporate valuation model, what should be the company's stock price today (December 31, 2019)? Do not round intermediate…
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Meriton Ltd expects cash flows of $13 000, $11 500, $12 750, and $9635 over the next 4 years. What is the present value of these cash flows if the appropriate discount rate is 8 per cent? A. $49990.81B. $2700.81C. $49099.81D. $39099.81
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