Calculate the equity value as of june 1

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Question

Using the below financial statements and additional information given for Company XYZ,

a) Using Discounted Cash Flows method, calculate the equity value as of June 1, 2020.

b) What would you suggest to the investors of XYZ? BUY additional shares, HOLD the shares on hand or SELL the shares? Why?

Additional information:

1) Cost of debt is 8%

2) Cost of equity is 15%

3) Number of shares is 200 million.

4) Assume that at the end of 2024 company owners will sell the company's assets with their book value and will pay all debt on the balance sheet. Hint: The remaining cash which is equity value on hand can be considered as the terminal value.

5) Boursa price per share is 950 fils on June 1, 2020.

Reference no: EM132597809

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