Determine the market value of rome corporation operations

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Question - Venetian Industries is interested in acquiring shares in Rome Corporation. The Venetian CEO has estimated Rome's available cash flows for the next 3 years: $ 7 million, $ 9 million, and $ 12 million. After the third year, available cash flow is expected to grow 5% steadily. Rome Corporation's weighted average cost of equity (WACC) is 7%, the market value of its debt and preferred shares total $ 60 million. Rome Corporation has $ 22 million of non-operating assets and 9 million common shares outstanding.

A. Calculate the present value of the expected available cash flows for the next 3 years.

b. Determine the market value of Rome Corporation's operations.

c. Calculate an estimate of the price per share of Rome Corporation.

Reference no: EM133075769

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