FUND.OF FINANCIAL MGMT:CONCISE-MINDTAP
10th Edition
ISBN: 9781337910972
Author: Brigham
Publisher: CENGAGE L
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Question
Chapter 9, Problem 19P
a.
Summary Introduction
To identify: The
Introduction:
Net Present Value:
It is that amount which indicates the difference reported on subtraction of the
b.
Summary Introduction
To identify: The horizon value of the firm.
c.
Summary Introduction
To identify The total value of the firm.
d.
Summary Introduction
To identify: The price per share.
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Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $3 million, $7 million, $11 million, and $16 million. After the fourth year, free cash flow is projected to grow at a constant 5%. Brandtly's WACC is 10%, the market value of its debt and preferred stock totals $48 million; the firm has $15 million in non-operating assets; and it has 22 million shares of common stock outstanding.
What is the market value of the company's operations? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
Sum of
M
Brandtly Industries invests a large
money in R&D; as a result, it retains and
reinvests all of its earnings. In other words,
Brandtly does not pay any dividends, and
it has no plans to pay dividends in the near
future. A major pension fund is interested in
Purchasing Brandtly's stock. The pension
find manager has estimated Brandtly's free
cash flows for the next 4 years as follows i
$3 million, $6 million, $11 milion, and $15
million. After the fourth year, free cash flow
is projected to grow at a constant 8% Brandtly's
WACC is 9%, the market value of its debt and
preferred stuck totals $62 million, the firm
has $62 million, the firm has $12 million in
non operating assets, and it has 19 million shares of
Common stock outstanding.
a) What is the present value of the free cash flows projected
during the next 4 years? Round your answer to the
nearest dollar. For ex: 13 million should be entered as 13,000,000.
b) What is the firm's horizon, or continuing, value?
() What is the…
Brandtly Industries invests a large sum of money in R&D; asa result, it retains and reinvests all of its earnings. In other words, Brandtly does not payany dividends, and it has no plans to pay dividends in the near future. A major pensionfund is interested in purchasing Brandtly’s stock. The pension fund manager has estimatedBrandtly’s free cash flows for the next 4 years as follows: $3 million, $6 million, $8 million,and $16 million. After the fourth year, free cash flow is projected to grow at a constant 3%.Brandtly’s WACC is 9%, the market value of its debt and preferred stock totals $75 million,the firm has $15 million in non-operating assets, and it has 7.5 million shares of commonstock outstanding.a. What is the present value of the free cash flows projected during the next 4 years?b. What is the firm’s horizon, or continuing, value?c. What is the market value of the company’s operations? What is the firm’s total marketvalue today?d. What is an estimate of Brandtly’s price…
Chapter 9 Solutions
FUND.OF FINANCIAL MGMT:CONCISE-MINDTAP
Ch. 9.A - For a stock to be in equilibrium, what two...Ch. 9.A - Prob. 2QCh. 9.A - RATES OF RETURN AND EQUILIBRIUM Stock Cs beta...Ch. 9.A - 9A-2 EQUILIBRIUM STOCK PRICE The risk-free rate of...Ch. 9.A - 9A-3 BETA COEFFICIENTS Suppose Chance Chemical...Ch. 9 - It is frequently stated that the one purpose of...Ch. 9 - Is the following equation correct for finding the...Ch. 9 - Prob. 3QCh. 9 - Two investors are evaluating GEs stock for...Ch. 9 - A bond that pays interest forever and has no...
Ch. 9 - Discuss the similarities and differences between...Ch. 9 - Prob. 7QCh. 9 - How do non-operating assets impact a firms...Ch. 9 - DPS CALCULATION Weston Corporation just paid a...Ch. 9 - CONSTANT GROWTH VALUATION Tresnan Brothers is...Ch. 9 - CONSTANT GROWTH VALUATION Holtzman Clothierss...Ch. 9 - NONCONSTANT GROWTH VALUATION Holt Enterprises...Ch. 9 - CORPORATE VALUATION Scampini Technologies is...Ch. 9 - PREFERRED STOCK VALUATION Farley Inc. has...Ch. 9 - Prob. 7PCh. 9 - PREFERRED STOCK VALUATION Earley Corporation...Ch. 9 - PREFERRED STOCK RETURNS Avondale Aeronautics has...Ch. 9 - Prob. 10PCh. 9 - Suppose you believe that the economy is just...Ch. 9 - Prob. 12PCh. 9 - CONSTANT GROWTH You are considering an investment...Ch. 9 - NONCONSTANT GROWTH Computech Corporation is...Ch. 9 - Prob. 15PCh. 9 - NONCONSTANT GROWTH Carnes Cosmetics Co.s stock...Ch. 9 - CONSTANT GROWTH Your broker offers to sell you...Ch. 9 - NONCONSTANT GROWTH STOCK VALUATION Taussig...Ch. 9 - Prob. 19PCh. 9 - CORPORATE VALUE MODEL Assume that today is...Ch. 9 - NONCONSTANT GROWTH Assume that it is now January...Ch. 9 - Comprehensive/Spreadsheet Problem NONCONSTANT...Ch. 9 - Prob. 23ICCh. 9 - Prob. 1TCLCh. 9 - Prob. 2TCLCh. 9 - Prob. 3TCLCh. 9 - Prob. 4TCLCh. 9 - Prob. 5TCLCh. 9 - Prob. 6TCLCh. 9 - Prob. 7TCLCh. 9 - Prob. 8TCLCh. 9 - Prob. 9TCL
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