Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
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Textbook Question
Chapter 14, Problem 12P
Bayani Bakery’s most recent FCF was $48 million; the FCF is expected to grow at a constant rate of 6%. The firm’s 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
- 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?
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Chapter 14 Solutions
Financial Management: Theory & Practice
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