Purple Panda Pharmaceuticals Inc.'s free cash flows (FCFS) are expected to grow at a constant long-term growth rate (g) of 20% per year into the future. Next year, the company expects to generate a free cash flow of $8,000,000. The market value of Purple Panda's outstanding debt and preferred stock is $36,000,000 and $20,000,000, respectively. Purple Panda has 3,000,000 shares of common stock outstanding, and its weighted average cost of capital (WACC) is 30%. Given the preceding information, complete the adjacent table (rounding each value to the nearest whole dollar), and assuming that the firm has not had any nonoperating assets in its balance sheet. Term Value Value of Operations $ Value of Firm's Common Equity $ Value of Common Stock (per share) $
Purple Panda Pharmaceuticals Inc.'s free cash flows (FCFS) are expected to grow at a constant long-term growth rate (g) of 20% per year into the future. Next year, the company expects to generate a free cash flow of $8,000,000. The market value of Purple Panda's outstanding debt and preferred stock is $36,000,000 and $20,000,000, respectively. Purple Panda has 3,000,000 shares of common stock outstanding, and its weighted average cost of capital (WACC) is 30%. Given the preceding information, complete the adjacent table (rounding each value to the nearest whole dollar), and assuming that the firm has not had any nonoperating assets in its balance sheet. Term Value Value of Operations $ Value of Firm's Common Equity $ Value of Common Stock (per share) $
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 15P
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![4. Corporate valuation model
Purple Panda Pharmaceuticals Inc.'s free cash flows (FCFS) are expected to grow at a constant long-term growth rate (g) of 20% per year into the
future. Next year, the company expects to generate a free cash flow of $8,000,000. The market value of Purple Panda's outstanding debt and
preferred stock is $36,000,000 and $20,000,000, respectively. Purple Panda has 3,000,000 shares of common stock outstanding, and its weighted
average cost of capital (WACC) is 30%.
Given the preceding information, complete the adjacent table (rounding each value to the nearest whole dollar), and assuming that the firm has not
had any nonoperating assets in its balance sheet.
Term
Value of Operations
Value of Firm's Common Equity
Value of Common Stock (per share)
Value
$
$
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb8579f89-451e-4b0c-a858-b042777b8cac%2F79de64f8-49f4-446f-a870-cddaf00d6edf%2Fo6wp9qr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4. Corporate valuation model
Purple Panda Pharmaceuticals Inc.'s free cash flows (FCFS) are expected to grow at a constant long-term growth rate (g) of 20% per year into the
future. Next year, the company expects to generate a free cash flow of $8,000,000. The market value of Purple Panda's outstanding debt and
preferred stock is $36,000,000 and $20,000,000, respectively. Purple Panda has 3,000,000 shares of common stock outstanding, and its weighted
average cost of capital (WACC) is 30%.
Given the preceding information, complete the adjacent table (rounding each value to the nearest whole dollar), and assuming that the firm has not
had any nonoperating assets in its balance sheet.
Term
Value of Operations
Value of Firm's Common Equity
Value of Common Stock (per share)
Value
$
$
$
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