XYZ corporation is expecting free cash flow of $100 million next year, and it will grow by 3% per year indefinitely afterward. XYZ’s discount rate is 12%. XYZ has $300 million worth of long term bonds outstanding, and 10 million shares of stock outstanding. What is a fair value for a share of XYZ? Do not include the $ sign and answer to the nearest $0.01.

Q: Cede & Co. expects its EBIT to be $80,000 every year forever. The firm can borrow at 4 percent.…

A: Value of the unlevered firm is calculated as below:Answer: Value is $520000.00

Q: NoGrowth Corporation currently pays a dividend of $2.08 per​ year, and it will continue to pay this…

A: Cost of Equity: It is the cost of the company while raising finance by issuing equity. It is…

Q: JRN Enterprises just announced that it plans to cut its dividend from $2.50 to $1.50 per share and…

A: Before Decision: D1 is $2.5 Current Share Price is $25 Growth rate is 4% per year After Decision: D1…

Q: SLMA Corp. for the last ten years, has earned and had cash flows of about P600,000 every year. As…

A: Solution Given Cash flows every year 600000 Expenses every year 500000 Treasury bond…

Q: Scampini Technologies is expected to generate $25 million in free cash flow next year, and FCF is…

A:

Q: The Wei Corporation expects next year's net income to be $15 million. The firm is currently financed…

A: GIVEN, NET INCOME = $15 million debt ratio = 55% equity ratio = 1- 0.55 = 0.45 = 45% capital budget…

Q: Hudson Corporation will pay a dividend of $3.10 per share next year. The company pledges to increase…

A: A model that helps to evaluate the value of the stock with the assumption that the dividend will…

Q: Cede & Co. expects its EBIT to be $56,000 every year forever. The firm can borrow at 8 percent. The…

A: Cost of Levered Equity refers to the cost of expected return by the shareholders which is being…

Q: Poulter Corporation will pay a dividend of $4.40 per share next year. The company pledges to…

A: Given information: Next dividend is $4.40 Dividend growth rate is 5.75% Required rate of return is…

Q: Marshall Law firm expects to generate free-cash flows of $200,000 per year for the next five years.…

A: Given information: Cash flows generated amounted to $200,000 for 5 years Growth rate is 5% WACC is…

Q: The Bank of America is considering its dividend policy. It can either choose to pay a total dividend…

A: Value of Stock = Present value of cash flows  Required return is 15% per annum i.e 3.75% per quarter

Q: Oregano Inc. estimates that this year’s earnings will be $75 million. There are 12 million shares…

A: A dividend is a payment made to shareholders by publicly traded firms, and it is derived from the…

Q: Gypco expects an EBIT of $10,000 every year forever. Gypco can borrow at 7 percent. Suppose Gypco…

A: Gyco's EBIT = $10000 Tax rate =35% Debt =15000 Cost of Equity =17%

Q: An analyst is trying to estimate the intrinsic value of the stock of ATR Kim Eng. The analyst…

A: Computation of price per share: Firm value= $25,000,000/(0.10 - 0.07)         =$833,333,333. This is…

Q: Zoom Enterprises expects that one year from now it will pay a total dividend of $4.6 million and…

A: given, forever dividend = $9.2 million r=13.3% outstanding shares = 4.8 million

Q: Zoom Enterprises expects that one year from now it will pay a total dividend of $4.6 million and…

A: Total amount to be spent on dividends and repurchase forever (A) = $9.2 million Cost of capital (r)…

Q: Beetlejuice has 15 million shares outstanding with a current market price of $2 per share.…

A: Net Present Value: It's important to remember that a company's long-term NPV is the difference…

Q: Salsa Inc. estimates that this year’s earnings will be $75 million. There are 12 million shares…

A: a) Earning per share = Yearly earnings / Number of shares = 75,000,000 / 12,000,000 = $ 6.25…

Q: Newman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year…

A:

Q: Wil Technologies is expected to generate $150 million in free cash flow next year, and FCF is…

A: As there is no equity or debt value of equity is = value of firm/shares outstanding

Q: Smiling Elephant, Inc., has an issue of preffered stock outstanding that pays a $5.00 dividend every…

A: Given: Dividend = $5 Price = $80.10

Q: Persian Rugs needs $600 million to support growth next year. If it issues new common stock to raise…

A: Solution: Funds raised after flotation cost : 600 /(1-.04)= 600/.96 = $ 625 million Number of shares…

Q: Demon Corporation expects to generate free-cash flows of $200,000 per year for each of the next five…

A: Value of equity = Value of firm - Value of debt Value of Firm = Value of cash flows in constant…

Q: What will the WACC be after recapitalization?

A: WACC: It is the weighted average cost of capital of the corporation for raising various sources of…

Q: NoGrowth Corporation currently pays a dividend of $2.00 per​ year, and it will continue to pay this…

A: Cost of Equity: It is the cost of the company while raising finance by issuing equity. It is…

Q: Leni Inc. is an all-equity firm. At the end of the current year, the CFO expects EBIT to be $10M,…

A: Market value: = Total number of shares × Market price per share

Q: Zoom Enterprises expects that one year from now it will pay a total dividend of $5.1 million and…

A: Repurchase of shares from investors and paying dividends to investors will have same effect to…

Q: Hudson Corporation will pay a dividend of $2.66 per share next year. The company pledges to increase…

A: Investors have different options to make investments, and the motive behind investments is to…

Q: Meyer & Co. expects its EBIT to be $78,000 every year forever. The firm can borrow at 7 percent.…

A: Value of firm = EBIT / Cost of capital

Q: Newman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year…

A: Current dividend (D0) = $ 1.98 Growth rate for 3 years = 25% Growth rate after 3 years = 5% Required…

Q: Bruce & Co. expects its EBIT to be $185,000 every year forever. The firm can borrow at 9 percent.…

A: Since you have posted multiple questions, we will solve the first question for you as per the honor…

Q: Newman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year…

A: It is given that,Growth rate for first three year is 25%.Growth rate after three year is 6%.Last…

Q: The analyst estimates that after three years the National Inc’s free cash flow will grow at a…

A: The value of company can be calculated as per the free cash flow valuation model

Q: Newman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year…

A: Dividend Discount model is used to calculate this. Dividend for Year 1,2 and 3 is calculated along…

Q: Scampini Technologies is expected to generate $50 million in free cash flow next year, and FCF is…

A: The share price is the current market price of the share. It is the price of the share at any…

Q: Pimento Inc. estimates that this year’s earnings will be $75 million. There are 12 million shares…

A: Given: Earnings = $75 million Shares outstanding = 12 Million Price = $27.50

Q: Canadian Tire just announced that it plans to reduce its dividend from $2.50 to $1.50 per share and…

A: The question is related to Dividend Policy. The questionis solved by using Grodens Model. First we…

Q: What is the maximum price per share that Newman should pay for Grips if it has a required return of…

A: Value of Equity shares is based on the discounted value of dividend at the required rate of return.

Q: Scarab Technologies is expected to generate $175 million in free cash flow next year, and FCF is…

A: Free cash flow next year = 175 million Growth rate = 7% WACC=10% Share outstanding = 45million

Q: The Wei Corporation expects next year's net income to be $10 million. The firm is currently financed…

A: In residual distribution model, we distribute dividend from net income after retaining funds for…

Q: Lily Co. is expected to pay a dividend of $12 at the end of this year. The firm would like to issue…

A: In this we have to calculate cost of equity using dividend discount model.

Q: Scampini Technologies is expected to generate $100 million in free cash flow next year, and FCF is…

A: The value of the stock will be the value of the equity/firm divided by the number of shares…

Q: SLMA Corp. for the last ten years, has earned and had cash flows of about P600,000 every year. As…

A: Shareholders are the owners of the share of the company. They participate in the important business…