Year12345 Free Cash Flow$22 million$26 million $29 million$30 million $32 million General Industries is expected to generate the above free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 5% per year. If the weighted average cost of capit cash of $20 million, debt of $45 million, and 80 million shares outstanding, what is General Industries' expected current share price? OA. $6.51 OB. $9.3 OC. $7.44 OD $62

Year12345 Free Cash Flow$22 million$26 million $29 million$30 million $32 million General Industries is expected to generate the above free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 5% per year. If the weighted average cost of capit cash of $20 million, debt of $45 million, and 80 million shares outstanding, what is General Industries' expected current share price? OA. $6.51 OB. $9.3 OC. $7.44 OD $62

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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9
Unlevered Value Richter Manufacturing has a 10% unlevered cost of equity. Richter forecasts the following free cash flows (FCFS), which are expected to grow at a constant 2% rate after Year 3. Year 2 $755 What is the horizon value of the unlevered operations? Do not round intermediate calculations. Round your answer to the nearest dollar. FCF Year 1 $720 $ Year 3 $820 What is the total value of unlevered operations at Year 0? Do not round intermediate calculations. Round your answer to the nearest dollar.
Intrinsic valuation. Given the following: Free cash flows: year 1: -$15m year 2: $25m year 3: $30m WACC = 10%. After 3 years, cash flows will grow at a constant 4% $15m in marketable securities, $80m in debt, and 1 million in shares calculate: a. the horizon value b. the current value of operations c. the intrinsic value per share (Show all work)
WACC Estimation On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $20 million in new projects. The firm's present market value capital structure, here below, is considered to be optimal. There is no short-term debt. Debt $30,000,000 Common equity 30,000,000 Total capital $60,000,000 New bonds will have an 7% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so the dividend yield is $1.20/$30 = 4%.) The marginal tax rate is 40%. In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Enter your answer in dollars. For example, $1.2 million should be entered as $1200000.$ Assuming there is sufficient…
Intro Nickelon's free cash flow during the current year is $150 million, which is expected to grow at a constant rate of 5% in the future. The weighted average cost of capital is 11%. Part 1 What is the firm's total corporate value (in $ million)? 0+ decimals Submit
Growth firm
Question 3 Gilmore Limited has the following projected equity cash flows (FCFE) and enterprise free cash flows (FCFF) over the next five years: $ millions Year FCFE Interest (1 - t) FCFF 1 120 30 150 2 125 32 157 3 132 33 165 4 140 35 175 5 150 37 187 Terminal Value 2,500 4,200 Note: terminal value is the value at the end of year 5. Gilmore Limited has a cost of equity of 12% and a WACC of 8%. a. What is the value of the equity? b. What is the value of the operations?
25 - For 2023, Volant Inc. is forecast to have Free Cash Flow to the Firm of $1.7 million and Free Cash Flow to Common Equity of $1.3 million. You forecast Free Cash Flow to the Firm to grow at a constant rate of 3.50% while Free Cash Flow to Common Equity grows at 4.00%. Volant’s tax rate is forecast to be 25%. You also collect the data shown below. Book Value Market Value Debt $14.5 million $15.0 million YTM: 4.24% Common Equity $21.0 million $45.0 million Rate of Return: 7.00% Calculate Volant’s Weighted Average Cost of Capital and round to 1 basis point. WACC:
WACC Estimation On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $15 million in new projects. The firm's present market value capital structure, here below, is considered to be optimal. There is no short-term debt. Debt $30,000,000 Common equity 30,000,000 Total capital $60,000,000 New bonds will have a 9% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so the dividend yield is $1.20/$30 = 4%.) The marginal tax rate is 25%. $ a. In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Round your answer to the nearest dollar. b. Assuming there is sufficient cash flow for Tysseland to maintain its target capital…
18
Horizon Value of Free Cash Flows Current and projected free cash flows for Radell Global Operations are shown below. Actual 2021 2022 Projected 2023 2024 Free cash flow (millions of dollars) $616.100 $676.780 $716.827 $766.355 Growth is expected to be constant after 2023, and the weighted average cost of capital is 12%. What is the horizon (continuing) value at 2024 if growth from 2023 remains constant? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number. $ million
Question 2 A corporate treasury estimates that an investment of $ 50 million to expand the manufacturing capacity of its company's main product line would generate additional cash flows of $ 12 million per year for 5 years. Assuming a discount rate of 8% calculate: a) The Net Present value of the stream of returns of the expansion b) The profitability index c) The internal rate of return d) Should the company proceed with the investment?

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