TBA Corporation announced that its cash flows from operations is $5 million. It also presents that the capital expenditure amounts to $1 million and they acquired additional debt amounting to $1,500,000. The FCFE of the firm would be?Use #1. The FCFE is expected to grow by 4%. Assume that the required rate of return of the shareholders is 12%, the value of equity would be?TQC Corporation announced that its cash flows from operations is $3 million. It also presents that the capital expenditure amounts to $800,000 and they issued new debts amounting to $1,000,000. The FCFE of the firm would be?Use #3. The FCFE is expected to grow by 5%. Assume that the required rate of return of the shareholders is 15%, the value of equity would be?Use #4. The market value of the firm’s preferred equity is $1 million. If the firm has 500,000 common shares outstanding, the value per share would be? (Hint: Deduct market value of preferred equity from the value of equity).

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Answered: TBA Corporation announced that its cash…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 4P

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TBA Corporation announced that its cash flows from operations is $5 million. It also presents that the capital expenditure amounts to $1 million and they acquired additional debt amounting to $1,500,000. The FCFE of the firm would be?
Use #1. The FCFE is expected to grow by 4%. Assume that the required rate of return of the shareholders is 12%, the value of equity would be?
TQC Corporation announced that its cash flows from operations is $3 million. It also presents that the capital expenditure amounts to $800,000 and they issued new debts amounting to $1,000,000. The FCFE of the firm would be?
Use #3. The FCFE is expected to grow by 5%. Assume that the required rate of return of the shareholders is 15%, the value of equity would be?
Use #4. The market value of the firm’s preferred equity is $1 million. If the firm has 500,000 common shares outstanding, the value per share would be? (Hint: Deduct market value of preferred equity from the value of equity).

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