Entire firm using the free cash flow model

Assignment Help Financial Management

Reference no: EM131931281

A firm’s total annual dividend payout is $1 million. Its stock price is $45 per share and it has 17,500,000 shares outstanding. The firm earned $4 million in Net Income last year. This year, the firm expects earnings to grow at 7%, with growth the year after that expected to be 5%, and then in all following years, the firm expects earnings to grow at 3%. The firm plans to hold their dividend payout ratio constant over the coming 20 years and beyond. The risk free rate is 3%, beta for the entire firm is 1.3, and the equity risk premium is 7.75%. What is the value of equity for the entire firm using the FREE CASH FLOW model, using Net Income as free cash flow?

Reference no: EM131931281

Questions Cloud

Using annual dividends as free cash flow : What is the value of equity for the entire firm using the DIVIDEND DISCOUNT model, using annual dividends as free cash flow?

What is unique about person behavior : Invent three characters, at least one of whom is a teenager. Make a character sketch of each. Create character's names, ages, and most important character

What is the effective rate of interest it pays : ABC company has average accounts receivable of $8 million. Its credit sales are $48 million a year. To finance its receivable, it factors these receivables.

The value states place on home territory : Which event in the post-World War II period probably brought the United States and the Soviet Union closest to nuclear war?

Entire firm using the free cash flow model : What is the value of equity for the entire firm using the FREE CASH FLOW model, using Net Income as free cash flow?

English landscape painter of the romantic period : Can you do two paragraphs on the work of John Constable (1776 - 1837), an English landscape painter of the Romantic period.

By how much will accounts receivable change in given time : ABC Company's Days Sales Outstanding (DSO) is expected to change next year from 40.3 days to 46.4 days, although annual sales are expected to stay constant.

Calculate the future worth : Calculate the future worth.

What is the company aftertax cost of debt and equity weight : What is the company’s aftertax cost of debt? What is the company’s cost of equity? What is the company’s equity weight?

User Account

All Pages