asyAir plc is an airline. It has 20 million ordinary shares currently trading on the stock market at a price of £8.64 each. It also has debt of £50 million. Free cash flows for its next accounting period are forecast to be £15 million. This figure is expected to increase by £3 million pa for each of the next four years after which it will level off at £30 million for 10 years. Forecasts after this period are not thought to be reliable. Given that you seek a return of 6%, would you invest in easyAir plc at the current share price?
asyAir plc is an airline. It has 20 million ordinary shares currently trading on the stock market at a price of £8.64 each. It also has debt of £50 million. Free cash flows for its next accounting period are forecast to be £15 million. This figure is expected to increase by £3 million pa for each of the next four years after which it will level off at £30 million for 10 years. Forecasts after this period are not thought to be reliable. Given that you seek a return of 6%, would you invest in easyAir plc at the current share price?
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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easyAir plc is an airline. It has 20 million ordinary shares currently trading on the stock market at a price of £8.64 each. It also has debt of £50 million.
State any assumptions that you have made in arriving at your answer.
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