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1. "A firm pays dividends of $5 million once annually. Analysts expect the dividends to remain at this amount indefinitely. The cost of equity is 14%.
a. Calculate the value of the firm.b. Analysts now expect that dividends will grow annually by 3%. Calculate the firm value."
2. A firm has expected free cash flows to the firm of $12 million annually which are expected to grow at 3.5% each year. It uses both debt and equity. The cost of equity is 13% and the after-tax cost of debt is 7.5%. The debt to asset ratio is 40%. Calculate the value of the firm.
3. "A firm has the projected cash flows as indicated below.
a. Assuming the Year 5 free cash flow amount is expected to grow at 3% annually indefinitely and the firm has a Weighted Average Cost of Capital (WACC) of 9.8% calculate the firm value.
b. If the market value of the debt is $170 million what is the value of equity?"
The stock of Pills Berry Company is currently selling at $60 per share. The firm pays a dividend of $1.80 per share. What is the annual dividend yield? If the firm has a payout rate of 50 percent, what is the firm’s P/E ratio?
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Juliet’s Children’s Clothes Company (JCCC) has a target profit of $100,000. That profit requires unit sales to be 2,000. JCCC’s variable cost per unit is $100 and fixed expenses are $50,000. If JCCC achieves that target profit, what is the margin of ..
Consider a world where the M&M Corporate Taxes Capital Structure theory is true, then answer the following question. An all-equity firm currently has a market value of $622.09. The firm decides to issue debt in order to repurchases $126.48 in equity...
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Imprudential, Inc., has an unfunded pension liability of $850 million that must be paid in 22 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 6.0..
Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a $2.50 dividend at year end (D1 = $2.50), and the dividend is expected to grow at a constant rate of 5.50% a year. The before-tax cost of debt is 7.50%, and the tax rate is..
There is a rule of thumb which can be used as an approximation called the Rule of 72 to find interest or period of time, given the other quantity, and it is given as ni=72.If $1 is invested for 10 years, what compound rate is necessary for the money ..
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