randtly Industries Invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Branddy does not pay any dividends, and it has no plans to pay dividends in the near future. A ma terested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $4 million, $7 million, $12 million, and $14 million. After the fourth year, free cash flo onstant 5%. Brandtly's WACC is 9%, the market value of its debt and preferred stock totals $80 million, the firm has $16 million in nonoperating assets, and it has 7 million shares of common stock outstanding. a. What is the present value of the free cash flows projected during the next 4 years? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 as 13,000,000. b. What is the firm's horizon, or continuing, value? Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000. c. What is the market value of the company's operations? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered a What is the firm's total market value today? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,00 $
randtly Industries Invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Branddy does not pay any dividends, and it has no plans to pay dividends in the near future. A ma terested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $4 million, $7 million, $12 million, and $14 million. After the fourth year, free cash flo onstant 5%. Brandtly's WACC is 9%, the market value of its debt and preferred stock totals $80 million, the firm has $16 million in nonoperating assets, and it has 7 million shares of common stock outstanding. a. What is the present value of the free cash flows projected during the next 4 years? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 as 13,000,000. b. What is the firm's horizon, or continuing, value? Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000. c. What is the market value of the company's operations? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered a What is the firm's total market value today? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,00 $
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
Related questions
Question
![Brandtly Industries Invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is
Interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $4 million, $7 million, $12 million, and $14 million. After the fourth year, free cash flow is projected to grow at a
constant 5%. Brandtly's WACC is 9%, the market value of its debt and preferred stock totals $80 million, the firm has $16 million in nonoperating assets, and it has 7 million shares of common stock outstanding.
a. What is the present value of the free cash flows projected during the next 4 years? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered
as 13,000,000.
$
b. What is the firm's horizon, or continuing, value? Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
$
c. What is the market value of the company's operations? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
$
What is the firm's total market value today? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
$
d. What is an estimate of Brandtly's price per share? Do not round intermediate calculations. Round your answer to the nearest cent.
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc80a8a85-82ce-4b91-9319-267a25cd5d83%2F1e7f0b0c-3bdd-426c-ab7f-ea2788a7c67d%2F886eacs_processed.png&w=3840&q=75)
Transcribed Image Text:Brandtly Industries Invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is
Interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $4 million, $7 million, $12 million, and $14 million. After the fourth year, free cash flow is projected to grow at a
constant 5%. Brandtly's WACC is 9%, the market value of its debt and preferred stock totals $80 million, the firm has $16 million in nonoperating assets, and it has 7 million shares of common stock outstanding.
a. What is the present value of the free cash flows projected during the next 4 years? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered
as 13,000,000.
$
b. What is the firm's horizon, or continuing, value? Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
$
c. What is the market value of the company's operations? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
$
What is the firm's total market value today? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
$
d. What is an estimate of Brandtly's price per share? Do not round intermediate calculations. Round your answer to the nearest cent.
$
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