What is the market price per share of stock

Assignment Help Financial Management
Reference no: EM131179669

Say you decide to start a firm and you need $500 million of capital to begin. You sell stock for its par value, a total of one million shares (par value is $200 per share), and sell $300 million of bonds at par value. You use the capital you just raised to buy $500 million of equipment. Assume that the average cost of capital = 12%. In the first year of operation, EBIT = $105 million, tax rate 40% and the required rate of return on equity is 22%. Assume that the market expects that the firm will continue to grow its Economic Profit at a rate of 6% annually, what is the market price per share of stock?

Reference no: EM131179669

After consideration of the potential future opportunity

Garner-Wagner has a project that produces the following cash flows: CF0 = −3,000,000; CF1−5 = 500,000; and has a discount rate of I/YR = 10. CF0 = −3,000,000; CF1−5 = 500,000;

What are the total shortage costs

ABC Company sells 2,995 chairs a year at an average price per chair of $198. The carrying cost per unit is $27.77. The company orders 330 chairs at a time and has a fixed orde

About the sustainable growth rate

Johnson Products earned $3.05 per share last year and paid a $1.50 per share dividend. If ROE was 13 percent, what is the sustainable growth rate? (Do not round intermediate c

Discuss why do some people protest against globalization

Discuss why do some people protest against globalization? What point do they make that all people, whether for or against globalization, should consider? How does political ri

Bonds outstanding with coupon rate

Union Local School District has bonds outstanding with a coupon rate of 3.2 percent paid semiannually and 21 years to maturity. The yield to maturity on these bonds is 3.5 per

Calculate the stocks expected return and standard deviation

Risk and Return. A stock will provide a rate of return of either −18% or +26%. If both possibilities are equally likely, calculate the stock's expected return and standard dev

If the benchmark price-sales ratio for the company

TwitterMe, Inc., is a new company and currently has negative earnings. The company’s sales are $2,700,000 and there are 275,000 shares outstanding. If the benchmark price-sale

Shares are assumed to be sold on first-in

On January 5, 2015, Allan purchases 500 shares of Wichmann, Inc., common stock at a cost of $23,400. On April 1, 2015, he purchases an additional 300 shares for $19,890. On No

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd