UnionPacificRailroadreportednetincomeof$770million after interest expenses of $320 million in a recent financial year. (The corporate tax rate was 36%.) It reported depreciation of $960millionin that year, and capitals pending was $1.2billion. The firm also had$4billion in debt outstanding on the books, was rated AA (carrying a yield to maturity of 8%), and was trading at par (up from $3.8 billion at the end of the previous year). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion. Union Pacific paid 40% of its earnings as dividends and working capital requirements are negligible. (The Treasury bond rate is 7%.) a. Estimate the FCFF for the most recent financial year. b. Estimate the value of the firm now. c. Estimate the value of equity and the value per share now
¨ UnionPacificRailroadreportednetincomeof$770million after interest expenses of $320 million in a recent financial year. (The corporate tax rate was 36%.) It reported
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