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Assume today is December 31, 2016. Barrington Industries expects that its 2017 after-tax operating income [EBIT(1 – T)] will be $400 million and its 2017 depreciation expense will be $65 million. Barrington's 2017 gross capital expenditures are expected to be $100 million and the change in its net operating working capital for 2016 will be $25 million. The firm's free cash flow is expected to grow at a constant rate of 6% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is 8.8%; the market value of the company's debt is $2.35 billion; and the company has 180 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Using the free cash flow valuation model, what should be the company's stock price today (December 31, 2016)? Round your answer to the nearest cent. Do not round intermediate calculations.
The accounting balance sheet is one of the major financial statements used by accountants and business owners
Conduct a What-If Analysis: This what-if analysis concerns an unforeseen circumstance that could impact the company''s current health as well as its future plans.
An investor is trying to assess the likely return from a stock he is considering to invest. The returns in the last 5 years are given in the table below. Returns % 5 9 7 11 8 Calculate the Standard Deviation (%) of Returns for the stock
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A company has two bonds outstanding. The first matures after five years and it has a coupon rate of 3%. The second matures after ten years and it has a coupon rate of 5%. Interest rates are currently 7%. What is the present value of each $1,000 bond?..
The depreciation tax shield is received early in the lease life. The lessor’s tax rate is substantially higher than the lessee’s.
Investment Bankers Association (IBA) has an agreement with Northern Airlines to underwrite an equity issue with a market value equal to $11 million. a) If IBA's underwriting fee is 5 percent and its out-of-pocket expenses associated with the issue ar..
All the major world markets are considered efficient. In a well-diversified portfolio, company specific risks vanish and the total risk of the portfolio reduces to its market risk. Deviations from purchasing power parity can result in real foreign cu..
An ordinary annuity has an interest rate of 10% and a future value of 80.00. What would be the future value of this same annuity, if it were an annuity due instead of a regular annuity? The future value of this annuity due is $
Joe's Bar (not its real name) uses 800 kegs of adult beverages per year on a continuous basis (assume 365 days of operations per year). Determine the reorder point d. Compute the Total Cost of Inventory.
Assume you buy a bond, hold it until it matures, and the issuer makes all payments. Your return on the bond will
The weighted average cost of capital for a firm:
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