INTERMEDIATE FINANCIAL MANAGEMENT
12th Edition
ISBN: 9781305718265
Author: Brigham
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Question
Chapter 15, Problem 12P
a)
Summary Introduction
To determine: Value of operations.
b)
Summary Introduction
To determine: Intrinsic value of equity preceding to repurchase.
c)
Summary Introduction
To determine: Intrinsic stock price of company prior to re-purchase.
d)
Summary Introduction
To determine: Number of shares will be repurchased and number of shares after re-purchase.
e)
Summary Introduction
To determine: Intrinsic value of equity and stock price after repurchase.
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5. Bayani Bakery's most recent FCF was $45million; the FCF is expected to grow at a constant rate of 6%. The firm's WACC is 14%, and it has 15 million shares of common stock outstanding. The firm has $30 million in short-term investments, which it plans to liquidate and distribute to common shareholders through via a stock repurchase; the firm has no other non-operating assets. It has $362 million in debt and $61 million in preferred stock.
What is the value of operations? Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places.
A firm’s most recent FCF was $2.4 million, and its FCF is expectedto grow at a constant rate of 5%. The firm’s WACC is 14%, and ithas 2 million shares outstanding. The firm has $12 million in shortterm investments that it plans to liquidate and then distribute ina stock repurchase; the firm has no other financial investments ordebt. Verify that the value of operations is $28 million. Immediatelyprior to the repurchase, what are the intrinsic value of equity andthe intrinsic stock price? ($40 million; $20/share) How manyshares will be repurchased? (0.6 million) How many shares willremain after the repurchase? (1.4 million) Immediately after therepurchase, what are the intrinsic value of equity and the intrinsicstock price? ($28 million; $20/share)
Bayani Bakery's most recent FCF was $48 million; the FCF is expected to grow at a constant
rate of 6%. The firm's WACC is 12%, and it has 15 million shares of common stock outstanding.
The firm has $30 million in short-term investments, which it plans to liquidate and distribute
to common shareholders via a stock repurchase; the firm has no other nonoperating assets.
It has $428 million in debt.
(a) What is the value of operations?
(b) Immediately prior to the repurchase, what is the intrinsic value of equity?
(c) Immediately prior to the repurchase, what is the intrinsic stock price?
(d) How many shares will be repurchased?
(e) How many shares will remain after the repurchase?
(f) Immediately after the repurchase, what is the intrinsic value of equity?
(g) Immediately after the repurchase, what is the intrinsic stock price?
Chapter 15 Solutions
INTERMEDIATE FINANCIAL MANAGEMENT
Ch. 15 - Define each of the following terms: a. Optimal...Ch. 15 - How would each of the following changes tend to...Ch. 15 - What is the difference between a stock dividend...Ch. 15 - One position expressed in the financial literature...Ch. 15 - Indicate whether the following statements are true...Ch. 15 - Prob. 1PCh. 15 - Prob. 2PCh. 15 - Dividend Payout
The Wei Corporation expects next...Ch. 15 - Prob. 4PCh. 15 - Prob. 5P
Ch. 15 - Prob. 6PCh. 15 - Stock Split
Suppose you own 2,000 common shares of...Ch. 15 - Stock Split Fauver Enterprises declared a 3-for-1...Ch. 15 - Residual Distribution Policy Harris Company must...Ch. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 12PCh. 15 - Integrated Waveguide Technologies (IWT) is a...Ch. 15 - Prob. 2MCCh. 15 - Assume that IWT has completed its IPO and has a...Ch. 15 - Prob. 4MCCh. 15 - Prob. 5MCCh. 15 - Suppose IWT has decided to distribute $50 million,...Ch. 15 - Prob. 7MCCh. 15 - Prob. 8MCCh. 15 - Prob. 9MC
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