Estimate of the price per share of rome corporation

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Rome Corporation invests in the research and development department and will pay no dividends for years to come. Venetian Industries is interested in acquiring shares in Rome Corporation. The Venetian CEO has estimated Rome's available 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. How much is the present value of the available cash flows expected for the next 3 years.

b. How much is the market value of Rome Corporation's operations.

c. What is the estimate of the price per share of Rome Corporation.

Reference no: EM132840093

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