Estimate the value per share-no future growth is expected

Assignment Help Financial Management

Reference no: EM131944468

ABC Company generated cash flows of $2.00 per share last year. ABC's cost of capital is 12%. Estimate the value per share of ABC for each of the following sets of assumptions.

A- No future growth is expected.

B- Constant future growth of 6% is expected.

C-Growth of 10% per year is expected for the next three years, followed by constant growth of 6%.

D-Growth is expected to decline from 10% to 6% over the next four years, and then continue at 6%.

E-Growth of 10% per year is expected for the next two years, declining to 6% over the next four years, and then continuing at 6%.

F-Growth is expected to be 12% in year one, 11% in year two, 10% in year three, then decline to 6% over the next four years, and then continue at 6%.

Reference no: EM131944468

Questions Cloud

What alternative might the banker suggest : You have recently retired and are intent on extensive travel to many of the exotic lands you have only read about. What alternative might the banker suggest?

Compute the cost of npv of this cost cutting project : Compute the cost of NPV of this cost cutting project and argue if company should invest in this project?

Capital structure weight of each source and the wacc : Find the cost of each financing source, capital structure weight of each source and the WACC.

Discuss the at-risk limitations relating to individuals : In summary, the at-risk rules disallowed losses in excess of investment. Discuss the at-risk limitations relating to individuals and closely held corporation.

Estimate the value per share-no future growth is expected : Estimate the value per share of ABC for each of the following sets of assumptions. No future growth is expected. Constant future growth of 6% is expected.

Highest-lowest prices at which company common stock sold : For the most recent day indicated, what were the highest and lowest prices at which the company’s common stock sold?

Government should intervene in economy and to what extent : When do you think the government should intervene in our economy and to what extent?

What are the disadvantages of a roll up : What is a roll up? What is the advantage of a roll up? What are the disadvantages of a roll up?

How would they create value in investment financial markets : How would they create value in the investment financial markets? What constraints would you impose on investment firms over such contracts?

User Account

All Pages