Suppose the growth rate of a firm's profits is 5%, the interest rate is 6%, and the current profits of the firm are $100 million dollars. What is the value of the firm?
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Q: 16 f
A: DIVIDEND NEXT YEAR = $2GROWTH RATE =7%STOCK PRICE = $100
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A: Return on equity (Re) = 16% Retention ratio (Rr) = 42%
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A: In the given question we need to compute the value of the firm.
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- If a “typical” firm reports $20 million of retained earnings on its balance sheet, can the firm definitely pay a $20 million cash dividend?The value of a firm is estimated to be $10 million. Next year’s cash flow is expected to be $1 million and the long-term growth is expected to be 3%. What is the cost of capital for this firm?A firm is expected to have free cash flow of $4 million next year, after that it will grow at 5% forever. The equity cost of capital of the firm is 12% while the weighted average cost of capital is 10%. The firm has $1 million cash, $6 million debt, and 5 million shares of stock. (a) What should be the enterprise value of the firm? (b) What should be the stock price per share?
- A firm has $100 million in total net operating capital. Its return oninvested capital is 14%, and its weighted average cost of capital is10%. What is its EVA? ($4 million)Suppose the interest rate is 12 percent and the firm is expected to grow at a rate of 7 percent for the foreseeable future. The firm's current profits are P50 million. What is the value of the firm (the present value of its current and future. earnings)?A firm has EBIT of $30 million. It has debt of $100 million and the cost of debt is 7%. Its unlevered cost of capital is 10% and tax rate at 35%. a) What’s its unlevered firm value? b) What’s its levered firm value? c) What’s its equity value?
- Suppose a company’s most recent free cash flow (i.e., FCF0)was $100 million and is expected to grow at a constant rate of 5percent. If the company’s weighted average cost of capital is 15percent, what is the current value from operations?The free cash flow to the firm is reported as $300 million. The interest expense to the firm is $30 million. If the tax rate is 28% and the net debt of the firm increased by $20 million, what is the approximate market value of equity if the FCFE grows at 2% and the cost of equity is 9%?If the Stanford Corporation's net income is $200 million, its common equity is $833 million, and management plans to retain 70 percent of the firm's earnings to finance new investments, what will be the firm's growth rate?
- A firm expects to generate $100 million in free cash flow in a year. This free cash flow is expected to grow at a constant annual rate of 5%. The firm has a 20% cost of capital, $300 million of debt, and 20 million shares of common stock outstanding. Compute the value of the firm's common stock (to the nearest dollar).The free cash flow to the firm is reported as $198 million. The interest expense to the firm is $15 million. If the tax rate is 35% and the net debt of the firm increased by $20 million, what is the approximate market value of the firm if the FCFE grows at 3% and the cost of equity is 14%?a firm has an asset base with a market value of 5.3 million. ITs debt is worth 2.5 million. if 0.2 million is paid in interest annually and the shareholders expect a 16% annual return, what is the weighted average cost of capital assuming no corporate taxes? what is the WACC if corporate taxes are 45%?