ns man pr plan loss of production will decrease Roybus's free cash flow by $181 million at the end of this year and by $63 million at the end of next year. a. If Roybus has 32 million shares outstanding and a weighted average cost of capital of 13.8%, what change in Roybus's stock price would you expect upon this announcement? (Assume that the value of Roybus's debt is not affected by the event.) b. Would you expect to be able to sell Roybus stock on hearing this announcement and make a profit? Explain.

ns man pr plan loss of production will decrease Roybus's free cash flow by $181 million at the end of this year and by $63 million at the end of next year. a. If Roybus has 32 million shares outstanding and a weighted average cost of capital of 13.8%, what change in Roybus's stock price would you expect upon this announcement? (Assume that the value of Roybus's debt is not affected by the event.) b. Would you expect to be able to sell Roybus stock on hearing this announcement and make a profit? Explain.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 28CE

See similar textbooks

Similar questions

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?
The Rock Timber Co. Had total earnings last year of P5million but expects total earnings to drop to P4,750,000 this year because of a slump in the housing industry. There are currently one million shares of common stock outstanding. The company has P4million worth of investments to undertake this year. The company financed 40% of its investment with debt and 60% with equity capital. The company paid P3 per share in dividends last year. a. If the company follows a pure residual dividend policy, how large a dividend will each shareholder receive this year? b. If the company maintains a constant payout ratio each year, how large will each shareholder receive this year? c. If the company follows a constant Peso dividend policy, how large a dividend will each stockholder receive this year?
Atlantic Corporation is the largest logging company in the north eastern part of the United States. Their logging reserves are being depleted and is in turn causing sales to fall. In addition, new environmental protection policies are making it very difficult for the procurement of new logging sites. As a result, their dividends are declining at a constant rate of 5% per year. Dividends paid at the end of last year are $5 per share, and the required rate of return on the stock is 15%. What is the value of Atlantic corporation stock? 2Assess the estimation techniques of long-term corporate investments, in your answer focus on the relationship between time and accuracy in stock valuation techniques?
Atlantic Corporation is the largest logging company in the north eastern part of the United States. Their logging reserves are being depleted and is in turn causing sales to fall. In addition, new environmental protection policies are making it very difficult for the procurement of new logging sites. As a result, their dividends are declining at a constant rate of 5% per year. Dividends paid at the end of last year are $5 per share, and the required rate of return on the stock is 15%. What is the value of Atlantic corporation stock? [Note: you are supposed to show every step of your calculation and interpret the result.] Assess the estimation techniques of long-term corporate investments, in your answer focus on the relationship between time and accuracy in stock valuation techniques? [Note: remember to use Harvard referencing to reference your sources]