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Praxis Corp. is expected to generate a free cash flow (FCF) of $2,875.00 million this year (FCF1 = $2,875.00 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF 2 = and FCF 3). After the third year, however, the FCF is expcected to grow at a constant rate of 4.26% per year, which will last forever (FCF 4). If Praxis Corp.'s weighted average cost of capital (WACC) is 12.78%, what is the current total firm value of Praxis Corp.?A. $8,593.74 million B. $64,625.55 million C. $47,654.29 million D. $57,185.15 million Praxis Corp.'s debt has a market value of $35,741 million, and Praxis Corp. has no preferred stock. If Praxis Corp. has 225 million shares of common stock outstanding, what is Praxis Corp.'s estimated intrinsic value per share of common stock? A. $51.95 B. $158.85 C. $52.95 D. $58.24
EMC Corporation has never paid a dividend. Its current free cash flow of $400,000 is expected to grow at a constant rate of 5%. The weighted average cost of capital is WACC=12%. Calculate EMC's estimated value of operation.
What is the project's net present value if the required rate of return is 15 percent?
A group of nerds perfect a process for converting seawater into crude oil. In order to keep their process off the market, OPEC offers license to process by paying the nerds an annual royalty payment of $100,000,000 starting one year from now, and the..
Tyler Company purchased a machine 3 years ago at a cost of $150,000. It had an expected life of 10 years at the time of purchase and an expected salvage value of $5,000. The firm has an Actual Collection Period of 63 days and pays its bills after 25 ..
Suppose Ford Motor stock has an expected return of 20% and a volatility of 40%, and Molson Coors Brewing has an expected return of 10% and a volatility of 30%. If the two stocks are uncorrelated, what is the expected return and volatility of an equal..
A firm has an asset base with a market value of $5.3 million. Its debt is worth $2.5 million. If $0.2 million is paid in interest annually and the shareholders expect a 16% annual return, what is the weighted average cost of capital assuming no corpo..
A company wants to purchase new equipment to replace some old, existing equipment. The old equipment is fully depreciated and has a current market value of $1.2M. The new equipment costs $10.4M and will be depreciated for 5 years. Describe and provid..
A firm has the opportunity to invest in a start-up solar company, a new cell phone technology, or the latest in television screen. These options are BEST described as _____projects. Which of the following is NOT an explanation for why an increased in..
Bosio inc's perpetual preferred stock sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would have a flotation cost of 4.00% of the price paid by investors. What is the company's c..
A newly issued 10- year maturity, 5% coupon bond making annual coupon payments is sold to the public at a price of $810. The bond will not be sold at the end of the year. The bond is treated as an original issue discount bond. What will be an investo..
Shack Homebuilders Limited is evaluating a new promotional campaign that could increase home sales. Compute the coefficient of variation.
Using options Quotations (LO4, CFA4) in problem 14, suppose JC penney stock sells for $25 per share immediately before your options “expiration. What is the return on your investment? What is your rate of return if the stock sells for 29$ per share (..
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