Bayani Bakery's most recent FCF was $48 million; the FCF is expected to grow at a constantrate of 6%. The firm's WACC is 12%, and it has 15 million shares of common stock outstanding.The firm has $30 million in short-term investments, which it plans to liquidate and distributeto common shareholders via a stock repurchase; the firm has no other nonoperating assets.It has $428 million in debt.(a) What is the value of operations?(b) Immediately prior to the repurchase, what is the intrinsic value of equity?(c) Immediately prior to the repurchase, what is the intrinsic stock price?(d) How many shares will be repurchased?(e) How many shares will remain after the repurchase?(f) Immediately after the repurchase, what is the intrinsic value of equity?(g) Immediately after the repurchase, what is the intrinsic stock price?

Free cash flows are the cash flows which are available to be distributed to shareholders. This is…

Answered: Bayani Bakery's most recent FCF was $48…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter14: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 12P: Bayani Bakerys most recent FCF was 48 million; the FCF is expected to grow at a constant rate of 6%....

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