g Nike's stock price is $68 per share, shares outstanding are $1,600 million, and the company plans to raise $1,000 million in capital with a projected EBIT of $10 bi
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Assuming Nike's stock price is $68 per share, shares outstanding are $1,600 million, and the company plans to raise $1,000 million in capital with a projected EBIT of $10 billion, how many new shares must Nike sell?
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- Stock Price after Recapitalization Lee Manufacturings value of operations is equal to 900 million after a recapitalization. (The firm had no debt before the recap.) Lee raised 300 million in new debt and used this to buy back stock. Lee had no short-term investments before or after the recap. After the recap, wd = 1/3. The firm had 30 million shares before the recap. What is P (the stock price after the recap)?Suppose IWT has decided to distribute $50 million, which it presently is holding in liquid short-term investments. IWT’s value of operations is estimated to be about $1,937.5 million; it has $387.5 million in debt and zero preferred stock. As mentioned previously, IWT has 100 million shares of stock outstanding. Assume that IWT has not yet made the distribution. What is IWT’s intrinsic value of equity? What is its intrinsic stock price per share? Now suppose that IWT has just made the $50 million distribution in the form of dividends. What is IWT’s intrinsic value of equity? What is its intrinsic stock price per share? Suppose instead that IWT has just made the $50 million distribution in the form of a stock repurchase. Now what is IWT’s intrinsic value of equity? How many shares did IWT repurchase? How many shares remained outstanding after the repurchase? What is its intrinsic stock price per share after the repurchase?How much is each share using DCF method. 98 million per year next three years, expected to grow at a steady rate in perpetuity thereafter. Cost of capital is 11.7%. The company has 80 million of debt and 8 million in cash. There are 18 million shares outstanding. The average EV/FCFF multiple of comparable companies is 10.7.
- 1. The company A has 10 million shares of common stock outstanding. The stock currently trades at $4.85 per share. The company also issues 10 million debt with 7% interest rate and will be repaid in next two years. The firm can also obtain debt with the same interest rate in the future. Company A’s weighted average cost of capital is 10.5 percent. The tax rate is 35 percent.a. Construct company A’s market value balance sheetb. What is the company’s cost of equity capital?c. What is the company’s unlevered cost of equity capital?d. Company A is thinking to invest on a project cost $5 million. Should the company choose debt financing or equity financing assume the financial distress cost is zero? How about if the financial distress cost is not zero?H5. The reported EV/EBITDA of a newspaper publishing firm is 10x. The firm has sales revenues of $780 million, EBITDA of $84 million, excess cash (i.e., marketable securities) of $60 million, $10 million of debt and seeks to issue 15 million shares of stock. What is your estimate of the firm’s share price?Omega company has the following capital structure as at 31st December 2020: Ordinary share (600,000 shares) Sh. 15,000,000 Retained Earnings 9,000,000 10% bonds 3,000,000 8% preference shares (300,000) 3,000,000 Total 30,000,000 The company has just paid a dividend of sh. 2 per share and its expected growth rate is 10% forever. The current market price of the share is sh. 20. The current market price of preferred shares is sh. 8. The company intends to venture into a lucrative business opportunity from next year which will require financing worth sh. 120M. The company expects to earn a net income of sh. 100M of which 10% will be paid out as dividend. The company will require a new issue of ordinary shares…
- Aaron Inc. bas 300 million shares outstanding expects earnings at the end of the year to be $ 628 million . The firm's equity cost of capital is 12 % Aaron pays out 50 % of its earnings in total 30 % paid out as dividends arid 20 % used to repurchase shares tf Aaron's earnings are expected to grow at a constant 6 % per year , what is Aaron's share price ? OA $ 25.65 OB $ 17.10 . OC . 18.55 OD . $ 34.20Q47 The Engineering Company currently has 100,000 outstanding stocks selling at OMR 100 each. The firm is also thinking of declaring a dividend of OMR 5 per share at the end of the current fiscal year. The firms opportunity cost of capital is 10%. What will be price of the stock at the end of the year assume that dividend is declared under MM model? a. OMR 105 b. OMR 115 c. OMR 110 d. OMR 100The stock of Payout Inc. will go ex-dividend tomorrow. The dividend will be $1 per share. There are 20,000 shares of stock outstanding. The market value balance sheet for Payout is below: Assets Liabilities and equity Cash $100,000 Equity $1,000,000 Fixed Assets $900,000 a) What price is Payout selling for today? Explain your answer. b) What price will it sell for tomorrow? Explain your answer. Now suppose that Payout announces its intention to repurchase $20,000 worth of stock instead of paying out the dividend. c) What effect will the repurchase have on an investor who currently holds 10 shares and sells 2 of those shares back to the company in the repurchase? d) Compare the effects of the repurchase to the effects of the cash dividend that worked out in (a). Show all of your working. Do not use Excel.
- H3. An unlevered firm with 300,000 shares outstanding has net income of $625,000. The firm’s stock sells for $9.50 per share and the book value per share is $12.00. The firm is considering an investment that is expected to cost $1 million and increase net income by $125,000. The cost of the investment will be financed with the issue of new shares. Assume the firm’s price-earnings ratio will remain constant. Does accounting dilution and/or market value dilution take place? Why? Show proper step by step calculationDamai Bhd’s expected earnings after taxes (EAT) is RM300 million. The currentmarket price of its common stock is RM5.00 per share. At present the companyhas 500 million shares outstanding and a PE ratio of 10.i. Calculate the intrinsic value of Damai Bhd’s common stock.ii. Would you buy the share at its current price? Why?Umbrella Corp is expected to pay a dividend at year end of D1 = $2.50. This dividend is expected to grow at a constant rate of 5.00% per year, and the common stock is currently valued at $71.00 per share. The before-tax cost of debt is 6.75%, and the tax rate is 40%. The target capital structure consists of 40% debt and 60% common equity. What is the company's WACC? (Ch. 10) Group of answer choices 7.74% 6.73% 3.73% 6.19% 7.81%
