Employer of person X is considering an expansion into a similar filed which includes acquisition of Company T. He is also considering purchasing Company BM each with 5 million shares of stock. The company has free cash flow of 24 million which is expected to grow at 5%. It also has debt of $200 million, preferred stock of $50 million, and short-term investment of $100million. WACC of 11%. To determine: The percentage of Company BM’s value of operations at year0 is due to the cash flows from year 4 and then beyond it if Company BM undertakes to expand.

Question

Jeff Krause purchased 1,000 shares of a speculative stock in January for $1.89 per share. Six months later, he sold them for $9.95 per share. He uses an online broker that charges him $10.00 per trade. What was Jeff's annualized HPR on this investment? Jeff's annualized HPR on this investment is %. (Round to the nearest whole percent.)

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Chapter 7, Problem 7MC

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Case summary:

Employer of person X is considering an expansion into a similar filed which includes acquisition of Company T. He is also considering purchasing Company BM each with 5 million shares of stock.

The company has free cash flow of 24 million which is expected to grow at 5%. It also has debt of $200 million, preferred stock of $50 million, and short-term investment of $100million. WACC of 11%.

To determine: The percentage of Company BM’s value of operations at year0 is due to the cash flows from year 4 and then beyond it if Company BM undertakes to expand.

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Jeff Krause purchased 1,000 shares of a speculative stock in January for $1.89 per share. Six months later, he sold them for $9.95 per share. He uses an online broker that charges him $10.00 per trade. What was Jeff's annualized HPR on this investment? Jeff's annualized HPR on this investment is %. (Round to the nearest whole percent.)

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