Floral Textile Ltd. is a daughter company of the Lily Fashion House Group and currently under a liquidation plan due to severe business contraction caused by the COVID 19 pandemic. The company plans to pay total dividend of $3.5 million now and $ 8.5 million one year from now as a liquidating dividend. The required rate of return for shareholders is 13.5%. Calculate the current value of the firm’s equity in total and per share if the firm has 2.5 million shares outstanding?
Net profit of Lily Fashion House Ltd in the current year is $2,575, 000. The company is planning
to launch a project that will requires an investment of $745 000 next year. Today the company’s
stock has market value of $22/share. Lily Fashion House has the current capital structure of 60%
in equity and 40% in debt. Required:
c. Floral Textile Ltd. is a daughter company of the Lily Fashion House Group and currently
under a liquidation plan due to severe business contraction caused by the COVID 19
pandemic. The company plans to pay total dividend of $3.5 million now and $ 8.5 million
one year from now as a liquidating dividend. The required
is 13.5%. Calculate the current value of the firm’s equity in total and per share if the firm
has 2.5 million shares outstanding?
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