a.
To determine: The Value of Equity and price per share before recapitalization plan
Introduction: A flow to equity (FTE) measure of profit that will be designated to investors by another organization other than the issuing organization, similar to a LLC. An Adjusted Present Value (APV) is the
b.
To determine: The Value of Equity and price per share after recapitalization plan.
c.
To determine: The Shares Repurchased, Value of Equity and the price of share after repurchase is completed.
d.
To determine: The Value of Equity after recapitalization using flow to equity method.
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- 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?arrow_forwardLast year the P.M. Postem corporation had sales of $419,000, with a cost of goods sold of $111,000. The firm’s operating expenses were $126,000, and its increase in retained earnings was $85,700. There are currently 20,000 shares of common stock outstanding, the firm’s pays a $1.63 dividend per share, and the firm has no interest-bearing debt. A. Assuming the firm’s earnings are taxed at 35%, construct the firm’s income statement. Complete the income statement below: round to the nearest dollar Revenues Cost of goods sold Gross profit Operating expenses Net operating income Interest expenses Earnings before taxes Income taxes Net incomearrow_forwardTRY Co., a company with 25% tax rate, has a free cash flow of P150,000,000 for the next year and is expected to grow at the rate of 4% constantly. The firm maintains a debt-to-equity ratio of 25%. The after-tax cost of debt and equity is 5% and 10%, respectively. Try Co. has 10,000,000 outstanding shares, and the combined market value of debt and preferred stock is P1,500,000,000. Compute for the per share intrinsic value of Try Co.arrow_forward
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT