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- Lance Inc.'s free cash flow was just $2.00 million. If the expected long-run growth rate for this company is 6.0%, if the weighted average cost of capital is 14.0%, Lance has $4 million in short-term investments and $4 million in debt, and 1 million shares outstanding, what is the intrinsic stock price?A firm is expected to have free cash flow of $4 million next year, after that it will grow at 5% forever. The equity cost of capital of the firm is 12% while the weighted average cost of capital is 10%. The firm has $1 million cash, $6 million debt, and 5 million shares of stock. (a) What should be the enterprise value of the firm? (b) What should be the stock price per share?BM expects to pay a dividend of $8 next year and expects these dividends to grow at 3.15% a year. The price of IBM is $67 per share. What is IBM's cost of equity capital?
- HighGrowth Company has a stock price of $20. The firm will pay a dividend next year of $1.03, and its dividend is expected to grow at a rate of 3.6% per year thereafter. What is your estimate of HighGrowth's cost of equity capital? The required return (cost of capital) of levered equity is __ % ? (Round to one decimal place.)IBM expects to pay a dividend of $6 next year and expects these dividends to grow at 3.92% a year. The price of IBM is $75 per share. What is IBM's cost of equity capital?An analyst is trying to estimate the intrinsic value of Blue Co. that has a weighted average cost of capital at 10%. The estimated free cash flows for the company for the following years are: Year 1 P3,000 Year 2 P4,000 Year 3 P5,000 The analyst estimates that after three years, free cash flow will grow at a constant annual percentage of 6%. What is the total intrinsic value of the company's common stock if combined debt and preferred stock has a P25,000 market value? *
- 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 value of its operation?You expect X-Co will pay a dividend of $76 million and repurchase $100 million of its common shares next year (Year 1) with both expected to grow 8% in Year 2 and 6% in Year 3. If you expect the company to be sold for $12 billion at the end of Year 3, and you have calculated the cost of equity to be 8.4%, what do you estimate the true value of the company’s net worth to be now? (First draw a timeline. Assume all cash flows are at the end of the year.)Last year Artworks, Inc. paid a dividend of $1.75. You anticipate that the company’s growth rate is 6 percent and have a required rate of return of 9 percent for this type of equity investment. What is the maximum price you would be willing to pay for the stock? Could you answer in an equation form so i can see where the numbers are supposed to be plugged in
- Aboudy Corporation's stock price is currently $22.00 per share. The company has just paid a dividend of $0.55 per share, and shareholders anticipate that this dividend will grow in the future at a rate of 6% per year. Use the Gordon model to calculate the company's cost of equity rE.A company had free cash flows of $788 million last year. Free cash flows are expected to grow at 3.5% per year. The WACC for the firm is 11.8%. They currently have $4.4 billion in debt outstanding, and have 233 million common stock outstanding. The company has 50 million preferred stock outstanding, that currently trade at $53. What is the estimate of the stock price based on the firm valuation model? Add your answerSuppose the Widget Company has a capital structure composed of the following, in billions: Debt = Taka 30 million, Common equity = Taka 30 million. If the before-tax cost of debt is 9%, and the tax rate is 30%. The stock price of common share is Taka 30 in the last year the company paid a dividend of Taka 5 and it will grow at the rate of 5% for ever. What is Widget’s weighted average cost of capital? Now assume that company has a project that needs Taka 130 million and the company plans to maintain its present capital structure and needs to issue new common stocks and the flotation cost would be 15%. Using the concept of breakpoint estimate the new WACC for the company.