The free cash flows projected during the next four years

Assignment Help Financial Management

Reference no: EM132018974

CORPORATE VALUATION Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $4 million, $6 million, $10 million, and $14 million. After the fourth year, free cash flow is projected to grow at a constant 3%. Brandtly's WACC is 13%, the market value of its debt and preferred stock totals $58 million; and it has 10 million shares of common stock outstanding. Write out your answers completely. For example, 13 million should be entered as 13,000,000.

What is the present value of the free cash flows projected during the next 4 years? Round your answer to the nearest cent. Do not round your intermediate calculations.

What is the firm's horizon, or continuing, value? Round your answer to the nearest cent.

What is the firm's total value today? Round your answer to the nearest cent. Do not round your intermediate calculations.

What is an estimate of Brandtly's price per share? Round your answer to the nearest cent. Do not round your intermediate calculations.

Reference no: EM132018974

Questions Cloud

Identify all problems related to the proposed training : Identify all problems related to the proposed training and discuss why these items are problems. Hint: You might want to review the competencies TD.

Calculate theoretical ex-rights price of moon company : Calculate the theoretical ex-rights price of moon company ltd.’s equity shares

Estimate of the stock current price : What is your estimate of the stock's current price?

Complete several project proposals for clients : In a career setting, it is very common to complete several project proposals for clients. For this reason, most project managers have templates.

The free cash flows projected during the next four years : What is the present value of the free cash flows projected during the next 4 years?

How much are you willing to pay for stock today : will pay a constant dividend of $2.97 each year for the next 10 years. How much are you willing to pay for this stock today?

Interest rates or rates of return on investments : Interest rates or rates of return on investments that have been adjusted for the effects of inflation are called ________ rates.

Repaid at the end of the loan term is called the bond: : The principal amount of a bond that is repaid at the end of the loan term is called the bond's:

Constant rate is stock expected : At what constant rate is the stock expected to grow after Year 3?

User Account

All Pages