### What is the price per share of the firm

Assignment Help Financial Management
##### Reference no: EM131026258

You have been asked to calculate the price of a firm using free cash flow evaluation. Last year XYX Company has Free Cash Flow of \$12 million. You expect the cash flows to grow at 10% for the next two years, then at 9% for the following two years and 6% thereafter. The WACC (required rate of return is 8.5% and the firms tax rate is 40%. Use Excel to solve the following.

1. What is the value of the firm?

2. If the market value of the debt is \$350 million and the number of share outstanding is 10 million, what is the price per share of the firm?

### Write a Review

#### Economic system lies between capitalism and communism

What type of economic system lies between capitalism and communism? Explain why it is more effective than other economic systems. Discuss the positive aspects of globalization, and contrast these with the negative aspects of globalization from the pe..

#### Entities undertake capital budgeting activities

Entities undertake Capital Budgeting activities because of _____.

#### What is the convexity of this instrument

What are the duration and modified duration of a seven-year, 3.5 percent coupon rate, annual coupon payment, \$1000 par value government note priced today to yield 3 percent to maturity. What is the convexity of this instrument?

#### Perpetuity value

Given an interest rate of 4 percent per year, what is the value at date t = 5 of a perpetual stream of \$2,400 payments that begins at date t = 10?

#### Original responsibility of the federal reserve

Which of the following was not an original responsibility of the Federal Reserve?

#### Analyzing the acquisition of a new machine

You are analyzing the acquisition of a new machine. The initial investment is estimated at \$30 million. It is anticipated that the purchase of the machine will increase the company’s revenue by \$15 million annually, while the associated operating exp..

#### Financial institution is considering a loan application

A financial institution is considering a loan application for \$2 million. It expects to charge 1/5 % origination fee and 10 basis points as service fee. The institution has estimated a risk premium to be around 0.25%. The market interest rate for sim..

#### An analyst evaluating securities has obtained

An analyst evaluating securities has obtained the following information. The real rate of interest is 2.6% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.1% next year, 3.1% the following year, 4.1% the third ye..

#### A fallen angel is a bond that has moved from

A "fallen angel" is a bond that has moved from?

#### Rise and fall

Case Study on LONG-TERM CAPITAL MANAGEMENT (A): RISE AND FALL

#### Exchange acts as the counterparty for all transactions

Futures contracts have less default risk because the exchange acts as the counterparty for all transactions. Forward contracts trade on an organized exchange and are marked to market daily. Companies should always try to reduce risk whenever they can..

#### What do you forecast as the market price of the stock

As an investor, what do you anticipate will be the outcome for Target Corporation by the end of the current fiscal year? Do you forecast improvement or loss? What do you forecast as the market price of the stock?

#### 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!