What is the price per share based on the equity free cash flow model?

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
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What is the price per share based on the equity free cash flow model?
Year 1:
Revenue: 630
Fixed costs: 120
Variable costs: 200
Additional investments in NWC: 10
Additional investments in operating long-term assets: 70
Depreciation: 60
Interest expenses: 35
Newly issued debt: 25
Principal repayment: 15
Cost of equity, Rs: 0.14
Corporate tax rate: 0.40
Growth rate per year:
From year 1 through year 5: 0.12
After year 5: 0.05
Market value:
Short-term debt: 100
Long-term debt: 600
Common Stock:
Market price per share: 18
Number of shares: 100
Select one:
a. $16.39
O b. $14.21
O c.
$13.09
O d. $15.33
Time left 0:04:22
Transcribed Image Text:What is the price per share based on the equity free cash flow model? Year 1: Revenue: 630 Fixed costs: 120 Variable costs: 200 Additional investments in NWC: 10 Additional investments in operating long-term assets: 70 Depreciation: 60 Interest expenses: 35 Newly issued debt: 25 Principal repayment: 15 Cost of equity, Rs: 0.14 Corporate tax rate: 0.40 Growth rate per year: From year 1 through year 5: 0.12 After year 5: 0.05 Market value: Short-term debt: 100 Long-term debt: 600 Common Stock: Market price per share: 18 Number of shares: 100 Select one: a. $16.39 O b. $14.21 O c. $13.09 O d. $15.33 Time left 0:04:22
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