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What is the stock expected dividend yield

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Stefani Enterprise just invested in a new machine for $20 million. The company forecasts the free cash flows shown below. The weighted average cost of capital (WACC) is 13%. What is the firms total corporate value, in millions?

Year 1 2 3 4 5

FCF 5,000,000 6,000,000 7,000,000 7,000,000 7,500,000

Based on the question above. If the company has market value of debt and preferred stock of $1 million and 1 million shares outstanding, what is the stock price of the company?

If Do= $2.25, growth (which is constant) =10% and Po= $75

a. What is the stock's expected dividend yield for the coming year?

b. If the required rate of return is 13.50%, what is the stock price of the stock? What would you recommend for investment strategy?

Reference no: EM133068972

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