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Rihana is a financial analyst in Bidget Corp. As part of her analysis of the annual distribution policy and its impact on the firm's value, she makes the following calculations and observations:The company generated a free cash flow (FCF) of $105 million in its most recent fiscal year.The firm's cost of capital (WACC) is 14%. The firm has been growing at 7% for the past six years but is expected to grow at a constant rate of 6% in the future.The firm has 26.25 million shares outstanding.The company has $280 million in debt and $175 million in preferred stock.Along with the rest of the finance team, Rihana has been part of board meetings and knows that the company is planning to distribute $90 million, which is invested in short-term investments, to its shareholders by buying back stock from its shareholders. Rihana also observed that, at this point, apart from the $90 million in short-term investments, the firm has no other nonoperating assets.Using results from Rihana's calculations and observations, solve for the values in the following tables:Value of the firm's operations:Intrinsic value of equity immediately prior to stock repurchase:Intrinsic stock price immediately prior to the stock repurchase:Number of shares repurchased:Intrinsic value of equity immediately after the stock repurchase:Intrinsic stock price immediately after the stock repurchase:
Assume that at the starting of January 2000, you buy shares in Advanced Micro Devices. It is now 5-years later, and you decide to evaluate your holdings to see if you have done well with this investment.
whereas Virgin can borrow dollars at 8% and pounds at 8.5% and What range of interest rates would make this swap attractive to both parties and what are the cost savings to each party?
A. What is the EOQ? B. How many orders will be placed per year? C. What is the total carrying cost? D. What is the total ordering cost?
You just signed a consulting contract that will pay you $38,000, $52,000, and $85,000 yearly at the end of the next three (3) years, respectively.
Keenan Co. is expected to maintain a constant 6.0 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 7.8 percent, what is the required return on the company's stock?
Given two projects, what are the decision models that you can use to make a decision as to which project you should accept? Which is the better?
However, Stock A's standard deviation of returns is 12% versus 8% for Stock B. Which stock should this investor add to his or her portfolio, or does the choice not matter?
Preferred stock of ABC corporation pays an yearly dividend at the rate of 4.5 percent per share. If ABC Corp's preferred shares are issued at $25 par value per share, & comparable yields are at 7.25 percent,
A bond manager who wants to hold the bond with the greatest potential volatility would be wise to hold;
Suppose you're the Director of Finance for large publicly traded company. Examine the single most important element that a Director of Finance must practice diligently.
Compute the growth duration of each company stock relative to the S&P Industrials and evaluate the growth duration of Company A relative to Company B.
When Britain announced its entry in the exchange rate mechanism of EMS on October 5, 1990, the price of British gilts (long term government bonds) soared and sterling rose in value.
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