Calculate the stock price for the company if the expansion

Assignment Help Financial Management
Reference no: EM131883802

Rexton Oil is an all-equity firm with 200 million of shares outstanding. Rexton currently has a cash flow of $270 Million of usds and expects future free cash flows of $60 millions per year. Management plans to use the cash to expand the firm's operations which will in turn increase future cash free cash flows to $90 million per year. If the cost of capital of Rexton's investments is 9%. (a). calculate the stock price for the company if the expansion where to happen.

Reference no: EM131883802

Questions Cloud

What is the partnership gain or loss : Partner X in the XYZ partnership (an equal partnership between X, Y, and Z) sells some land to the partnership. X's basis in the land is $200,000.
The trade-in value of the new car at the end of four years : The trade-in value of the new car at the end of 4 years is estimated to be $12,100. Assume your after-tax savings return is 4%.
About the relationship among interest rates and time : What does all of this tell you about the relationship among interest rates, time, and future sums?
Discuss the performance of the stock : Go to Yahoo! Finance or another source and pick a stock to track for the last year. Discuss the performance of the stock over the last year.
Calculate the stock price for the company if the expansion : calculate the stock price for the company if the expansion where to happen.
What is the cost spc incurs in given conditions : SPC produces plastic sheets. The capital cost for holding 1 thousand pounds of plastic sheets is $10. The company estimated that the inventories.
Cash for share repurchase rather than the expansion : Calculate the stock price if the company decides to use the cash for share repurchase rather than the expansion.
Establishing initial competitive advantage : In your opinion, which is more difficult and why: establishing initial competitive advantage or sustaining it over time?
What is firm weighted average cost of capital-common stock : What is the firm’s weighted average cost of capital (WACC2) if it has to issue new common stock?

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the effect of an open market sale

Suppose that the currency-to-deposit ratio is 40 percent and that the excess reserve ratio is 1 percent, whereas the required reserve ratio is 9 percent. Calculate the effect of an open market sale of $10m on the money supply (M), checkable deposits ..

  Forward rate is used as a forecast

Assume that interest rate parity holds. What is the approximate 10-year forecast of the peso’s spot rate if the 10-year forward rate is used as a forecast?

  Real options-decision-tree analysis

Utah Enterprises is considering buying a vacant lot that sells for $1.4 million. If the property is purchased, the company's plan is to spend another $6 million today (t = 0) to build a hotel on the property. What is the project's expected NPV if the..

  What is the geometric average return on this stock

Over the past four years a stock had prices of 15.40, 15.85, 16.30, and 15.70, respectively. The stock pays an annual dividene of .50 a share. What is the geometric average return on this stock please show work

  What is your net dollar sales projection for year

what is your net dollar sales projection for this year?

  What proportion of textbook receives favorable reviews

The editor of a textbook publishing company is trying to decide whether to publish a proposed business statistics textbook. What proportion of textbook receives

  Calculate the net present value of the proposal

Calculate the combined value of the proposed acquisition and calculate the net present value of the proposal

  The construction of diversified portfolios

Although investing requires the individual to bear risk, the risk can be controlled through the construction of diversified portfolios and by excluding any portfolio that offers an inferior return for a given amount of risk. To convince her that the ..

  What nominal annual interest rate will you be earning

You agree to make 24 deposits of $500 at the beginning of each month into a bank account. At the end of the 24th month, you will have $13,200 in your account. If the bank compounds interest monthly, what nominal annual interest rate will you be earni..

  Pursue restricted or relaxed current asset investment policy

Hardwig Inc. is considering whether to pursue a restricted or relaxed current asset investment policy. The firm's annual sales are expected to total $3,600,000, its fixed assets turnover ratio equals 4.0, and its debt and common equity are each 50% o..

  What is the present value of the savings

Your company will generate $65,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 8.25 percent, what is the present value of the savings?

  Calculator to determine the original deposit amount

Use your calculator to determine the original deposit amount.

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