TBA Corporation announced that its cash flows from operations is $5 million. It also presents that the capital expenditure amounts to $1 million and they acquired additional debt amounting to $1,500,000. The FCFE of the firm would be?
TBA Corporation announced that its cash flows from operations is $5 million. It also presents that the capital expenditure amounts to $1 million and they acquired additional debt amounting to $1,500,000. The FCFE of the firm would be?
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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- TBA Corporation announced that its cash flows from operations is $5 million. It also presents that the capital expenditure amounts to $1 million and they acquired additional debt amounting to $1,500,000. The FCFE of the firm would be?
- Use #1. The FCFE is expected to grow by 4%. Assume that the required
rate of return of the shareholders is 12%, the value of equity would be? - TQC Corporation announced that its cash flows from operations is $3 million. It also presents that the capital expenditure amounts to $800,000 and they issued new debts amounting to $1,000,000. The FCFE of the firm would be?
- Use #3. The FCFE is expected to grow by 5%. Assume that the required rate of return of the shareholders is 15%, the value of equity would be?
- Use #4. The market value of the firm’s preferred equity is $1 million. If the firm has 500,000 common shares outstanding, the value per share would be? (Hint: Deduct market value of preferred equity from the value of equity).
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