Lance Inc.'s free cash flow was just $3.00 million. If the expected long-run growth rate for this company is 8%, if theweighted average cost of capital is 16%, Lance has $6 million in short-term investments and $4.44 million in debt, and1 million shares outstanding, what is the intrinsic stock price?$21.03$19.57$42.06$27.70$31.56

Answered: Image /qna-images/answer/c762030f-1e3d-40c4-b235-5cd55fce260f.jpg

Answered: Lance Inc.'s free cash flow was just…

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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Young & Liu Inc.'s free cash flow during the just-ended year (t = o) was $100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the firm's value of operations, in millions? a. $998 O b. $1,050 Oc$1,158 Od. $948 Oe. $1,103
Manshukh
LBM Company just paid a $1.23 annual dividend. You noticed that the firm paid an annual dividend of $0.91 ten years ago. You expect the same growth rate to continue in the long run. If you require a return of 16 percent, how much are you willing to pay for one share of LBM stock? Group of answer choices $9.33 $9.59 $9.80 $9.29 $10.21
Kale Inc. forecasts the free cash flows (in millions) shown below. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 11.0% and FCF is expected to grow at a rate of 5.0% after Year 2, then what is the firm’s total corporate value (in millions)? Do not round intermediate calculations. Year 1 2 Free Cash flow -$30 $195 a. $3,413 million b. $2,901 million c. $3,044 million d. $2,743 million e. $2,643 million
devu
A firm has cash flow from operations of $138 million and needs $125 million for investment purposes, leaving $13 million of free cash flow. Assume the firm has 13 million shares outstanding and its shares are presently trading at $41 per share. How much would it pay out in dividends per share if the firm used 20% debt financing and the firm followed a strict residual dividend policy? $3.65 per share $2.92 per share $1.05 per share $3.25 per share
Based on a discounted free cash flow method, you have estimated the value of a firm to be $270 million. The company has $110 million of long-term debt outstanding (common equity comprises the rest). There are 14.0 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock?
The Drogon Company just issued a dividend of $2.36 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $30 a share, what is the company's cost of equity? Multiple Choice 8.43% 13.26% 13.92% 12.6% 12.87%
9
ACME, Inc. forecasts that it will have the free cash flows shown below. The free cash flows are expected to grow by 4% per year after year 3. Year 1 23 FCF (S million) 20 48 54 The weighted average cost of capital is 11%. The firm has $40 million of debt and 10 million shares outstanding. What is a good estimate of ACME's share price? O $55.25 $27.30 $60.70 $38.55
Suppose Watch-Over-Ya Corp's projected free cash flow for next year is FCF1 = $500,000 and FCF is expected to grow at a constant rate of 5.0% per year indefinitely. Watch-Over-Ya has no debt or preferred stock, and its weighted average cost of capital (WACC) is 8.2%. It has 200,000 shares outstanding What is the stock’s value per share?
Your company's stock sells for $50 per share, its last dividend (Do) was $2.00, its growth rate is a constant 5 percent, and the company will incur a flotation cost of 15 percent if it sells new common stock. What is the firm's cost of new equity, re? A) 9.20% B) 9.94% C) 10.50% D) 11.75%

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