MNO Oil has assets with a market value of $600 million, $64 million of which are cash. It has debt of $250 million, and 20 million shares outstanding. Assume perfect capital markets. If MNO Oil distributes the $64 million as a dividend, then its stock price after the dividend will be closest to:
Q: Mayo plc is financed by 31 million shares of equity with a market capitalisation of £74.4 million,…
A: a. The Earnings Per Share, Current Share Price, and the Cost of Equity: A company's earnings per…
Q: Clark Industries has 200 million shares outstanding, a current share price of $30, and no debt.…
A: Total Number of shares outstanding are 200 million Share price is $30 Cash in hand or distributable…
Q: Suppose that Papa Bell, Inc.’s equity is currently selling for $50 per share, with 3.5 million…
A: There are 12,000 bonds outstanding and are selling at 94% of par value. Generally, the par value of…
Q: St. Louis Co. and St. Romuald Co. are identical firms in all respects except for their capital…
A: Here, Interest Rate on Debt is 8%
Q: a. According to MM Proposition I, what is the stock price for Pi Technology? b. Suppose Pi…
A: MM hypothesis 1 determines the value of firm when there are no taxes. As per this approach, when…
Q: Company has assets of market value $400 mill. $60 mill worth is cash debt outstanding has market…
A: The financial ratios refer to the ratios calculated using the financial data from the company's…
Q: Big Industries has the following market-value balance sheet. The stock currently sells for $20 a…
A: "Since you have posted a question with multiple sub parts, we will solve first three sub parts for…
Q: What will the new earnings per share be if the firm uses its excess cash to complete a stock…
A: Stock Repurchase: Also known as buyback, it is a decision made by the firm to repurchase its shares…
Q: Harper Industries has $900 million of common equity on its balance sheet, its stockprice is $80 per…
A: Computation:
Q: Unida Systems has 40 million shares outstanding trading for $10 per share. In addition, Unida has…
A: Equity = Number of shares outstanding * Price per share = 40 million shares * 10 per share = 400…
Q: If the firm were all equity financed and the firm followed a strict residual dividend policy, how…
A: When a company follows strict residual dividend policy then it means that company will calculate…
Q: liff Corp. (CC) has an enterprise value (MV equity + debt – cash) of $330 million, $50 million in…
A: Repurchasing of shares means buy back of shares from public in return of cash.
Q: Suppose Alpha Industries and Omega Technology have identical assets that generate identical cash…
A: Data given:: i) Alpha Industries is an all equity firm with 10 million equity shares outstanding…
Q: What is the firm's estimated intrinsic value per share of common stock?
A: Information Provided: WACC = 10% FCF 1 = $70 million Growth rate = 5% Long term debt & Preferred…
Q: d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm…
A: d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm…
Q: A firm has 41 million shares outstanding with a current share price of $4.30 The firm has a…
A: Calculation of Enterprise Value Enterprise value = Market Capitalization + Outstanding debt – Cash…
Q: A firm has a market value equal to its book value, excess cash of $1,000, and equity worth $20,800.…
A: Excess cash = $1000 Existing number of shares = 6000 Market value = $20,800 Price per share = Market…
Q: A firm has 10 million shares outstanding with a market price of P20 per share. The firm has P25…
A: Given, Outstanding Shares = 10 million or 10,000,000 Market Value Per Share = P20 per…
Q: The current market value of a firm’s share is $32 million, with 20 million shares outstanding. The…
A: The price to earning valuation model is a model for determination of value of company on the basis…
Q: A firm earns $3550 million in profits and pays $2480 million in dividends for the year. The firm…
A: The dividend is part of the profits given by the company to its shareholders. Preferred…
Q: You are considering a stock investment in one of two firms (NoEquity, Inc, and NoDebt, Inc), both of…
A: Capital structure defines the proportion or combination of various sources of capital financing such…
Q: Mercer Corp. is a equity firm with 10 million shares outstanding and $140 million worth of debt…
A: The Modigliani-Miller theorem (MM) states that the market value of a company is calculated by its…
Q: Based on the free cash flow valuation model, you estimate Tigers Construction's value of operations…
A: Free Cash Flow refers to amount of cash generated by an entity from its general operations. It…
Q: If a company has 2240 million shares outstanding and each share is worth AUD 3.60 the market…
A: Shares outstanding will be all of a company's shares that have already been approved, issued, and…
Q: A firm has a market value equal to its book value. Currently, the firm has excess cash $7,000 and…
A: Stock price per share is the price of company's stock prevailing in the market. It is used to…
Q: Tammuz Enterprises, a public shareholding company, wants to calculate its weighted average cost of…
A: WACC is the overall average cost of the firm to arrange the funds from the different sources. It is…
Q: Suppose Beta Industries and Delta Technology have identical assets that generate identical cash…
A: Share Price: A share price, often known as a stock price, is the amount of money it would take to…
Q: Angina Inc. has 5 million shares outstanding. The firm is considering issuing an additional 1…
A: Calculate the net proceedings as follows:
Q: A firm has a market value equal to its book value. Currently, the firm has excess cash of $2,000 and…
A: Outstanding Shares: The number of shares that are currently held by the company’s shareholders are…
Q: A firm has 10 million shares outstanding with a market price of $20 per share. The firm has $25…
A: The value of the firm's operation is calculated by considering the value of equity, debt, and…
Q: Your company has expected future cash flows of $70 million in perpetuity. The company's WACC is…
A: Cashflow in perpetuity = $70 million WACC =12.8% So, Enterprise value = Cashflow/WACC = 70/0.128 =…
Q: If a firm’s equity is valued at $50 million and it has 500,000 shares of stock issued and…
A: Given Value of equity = $50 million Shares outstanding = 500,000
Q: AMC Corporation currently has an enterprise value of $390 million and $120 million in excess cash.…
A: The repurchase of shares involves buying shares from the market to reduce the equity ownership of…
Q: Compute for the value of the firm to the shareholders using dividend discount model?
A: The value of a firm means the value a firm is worthy of at a point of time. The total value of the…
Q: Suppose Beta Industries and Delta Technology have identical assets that generate identical cash…
A: MM proposition refers to the actual value of the unlevered firms should be equal to the value of…
Q: Big Industries has the following market-value balance sheet. The stock currently sells for $20 a…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: A company has a share price of $22.15 and 118 million sharesoutstanding. Its market-to-book ratio is…
A: Computation:
Q: ABC company currently has $250,000 market value (and book value) of perpetual debt outstanding…
A:
Q: g Nike's stock price is $68 per share, shares outstanding are $1,600 million, and the company…
A: Company need money and they can raise from the market by issue of new shares but how many shares to…
Q: What is CC’s current debt-to-equity ratio? What is CC’s current stock price? If CC distributes $18…
A: Debt to Equity Ratio: This ratio is applied for the evaluation of the business's financial…
Q: A firm earns $895 million in profits and pays $626 million in dividends for the year. The firm has…
A: There is a difference between preferred stock and common stock. Preferred stock do not carry any…
Q: A firm earns $895 million in profits and pays $626 million in dividends for the year. The firm has…
A: Number of common shares = 390 million Number of preferred shares = 135 million Preferred dividend =…
Q: Based on a discounted free cash flow method, you have estimated the value of a firm to be $270…
A: In free cash flow valuation model, intrinsic value of a company is equal to the present value of its…
Q: Big Industries has the following market-value balance sheet. The stock currently sells for $20 a…
A: Income statement: Under this Statement showing the company’s performance over a period of time by…
Q: In previous years, Cox Transport reacquired 4 million treasury shares at $20 per share and, later, 2…
A: Compute weighted average cost per treasury share as shown below:
Q: Anle Corporation has a current stock price of $19.49 and is expected to pay a dividend of $1.25 in…
A: Equity cost of capital = (Expected stock price after dividend + Dividend - Current stock price) /…
Q: A firm has a market value equal to its book value. Currently, the firm has excess cash of $7,000 and…
A: Market Value = Book Value Excess Cash = 7000 Other Assets = 21000 Equity = 28000 Number of shares…
Q: An all-equity financed company currently has $300 million in excess cash. -200 million shares…
A: Given Information: Excess cash=$300 million Number of shares outstanding=200 million Market price…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- 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?Bayani Bakerys most recent FCF was 48 million; the FCF is expected to grow at a constant rate of 6%. The firms 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 368 million in debt and 60 million in preferred stock. 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? How many shares will remain after the repurchase? e. Immediately after the repurchase, what is the intrinsic value of equity? The intrinsic stock price?Wyatt Oil has assets with a market value of $600 million, $70 million of which are cash. It has debt of $250 million, and 20 million shares outstanding. Assume perfect capital markets. If Wyatt Oil distributes the $70 million as a share repurchase, then its stock price after the share repurchase will be closest to: $11.00 $12.50 $14.00 $17.50
- Cliff Corp (CC) has assets of $300 million including $25 million in cash. CC has 1 million share of stock outstanding and $70 million of debt. Assume capital markets are perfect. What is CC’s current debt-to-equity ratio? What is CC’s current stock price? If CC distributes $18 million in dividends, then what is the new ex- dividend share price? If instead of paying the dividend CC repurchases $18 million of stock, then what will be the new share price? What is the new debt-to-equity ratio after the payout?Based on the corporate valuation model, the total corporate value of Chen Lin Inc. is $725 million. Its balance sheet shows $160 million in notes payable, $130 million in long-term debt, $30 million in preferred stock, $140 million in retained earnings, and $280 million in total common equity. If the company has 10 million shares of stock outstanding, what is the best estimate of its stock price per share? a. $40.50 b. $43.00 c. $56.50 d. $43.50 e. $26.50Brightland Inc. has a market value equal to its book value. Currently, thefirm has excess cash of $1,500, other assets of $5,800, and equity valuedat $5,000. The firm has 250 shares of stock outstanding and net income of$500. What will the new earnings per share be if the firm uses 30 percentof its excess cash to complete a stock repurchase?
- Company has assets of market value $400 mill. $60 mill worth is cash debt outstanding has market value of $150 million, 20 million shares outstanding. -Assuming perfect capital markets, if the company distributes $60 million in cash as a dividend, calculate its debt-to-equity ratio after the dividend paymentSuppose Beta Industries and Delta Technology have identical assets that generate identical cash flows. Beta Industries is an all-equity firm, with 13 million shares outstanding that trade for a price of $19.00 per share. Delta Technology has 23 million shares outstanding, as well as debt of $74.10 million. According to MM Proposition I, what is the stock price for Delta Technology? (Round to the nearestcent.) Suppose Delta Technology stock currently trades for $11.25 per share. What arbitrage opportunity is available? What assumptions are necessary to exploit this opportunity? (Round to the nearestcent.)Based on the corporate valuation model, the value of Chen Lin Inc.'s operations is $ 897 million. Its balance sheet shows $ 103 million in notes payable, $ 99 million in long-term debt, $ 15 million in preferred stock, $140 million in retained earnings, and $280 million in total common equity. If the company has 27 million shares of stock outstanding, what is the best estimate of its stock price per share?
- TJ's has a market value equal to its book value. Currently, the firm has excess cash of $218,500, other assets of $897,309, and equity of $547,200. The firm has 40,000 shares of stock outstanding and net income of $59,800. Management has decided to spend 15 percent of the excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?Unida Systems has 32 million shares outstanding trading for $9 per share. In addition, Unida has $85 million in outstanding debt. Suppose Unida’s equity cost of capital is 13%, its debt cost of capital is 9%, and the corporation tax rate is 32%. a) What is Unida’s unlevered cost of capital? b) What is Unida’s after-tax debt cost of capital? c) What is Unida’s weighted average cost of capital?Based on the corporate valuation model, Bizzaro Co.'s value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations, $30 million of long-term debt, $40 million of preferred stock, and $100 million of common equity. Bizzaro has 15 million shares of stock outstanding. What is the best estimate of the stock's price per share? show work in excel