Fair market value-weighted-average cost of capital

Assignment Help Financial Management

Reference no: EM131062943

Walleye Feeders Inc. Valuations

See the table below showing a three-year forecast for Walleye Feeders Inc. and complete the following valuation scenarios:

Year 2013 2014 2015

Free cash flow ($ millions) $-20 $48 $54

1. Estimate the fair market value of Walleye Feeders at the end of 2012. Assume that after 2015, free cash flows are expected to grow at a constant rate of 12.5% and Walleye Feeders' weighted-average cost of capital is 14 percent.

2. Estimate the fair market value per share of Walleye Feeders' equity at the end of 2012 if the company has 50 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $55 million.

Please provide calculations

Reference no: EM131062943

Questions Cloud

What is the risk premium on common stock : Foster Company calculation risk premium on its Common stock. What is the risk premium on common stock? Current price per share of common $50.00 Expected Dividend per share next year $3.00 Constant annual dividend growth rate 9% Risk-free rate of retu..

What is the difference between these two WACCs : Sapp Trucking's balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 5.30 %. This debt currently has a market value of $50 million. The CFO thinks the WACC should be based on mar..

Formulation of the basic time value of money formula : Complete each of the following problems, and be sure to show your work with the appropriate formulation of the basic time value of money formula. Irrigated farmland in Phillips County has been selling at $6,000 per acre. If this farmland is expected ..

What is this project equivalent annual cost : A five-year project has an initial fixed asset investment of $295,000, an initial NWC investment of $27,000, and an annual OCF of −$26,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..

Fair market value-weighted-average cost of capital : Estimate the fair market value of Walleye Feeders at the end of 2012. Assume that after 2015, free cash flows are expected to grow at a constant rate of 12.5% and Walleye Feeders' weighted-average cost of capital is 14 percent.

Calculate the present value of the contract : Carmelo Anthony may have the chance to sign what has been described as a $100 million dollar contract of 10 equal payments paid annually. Calculate the present value of the contract, assuming a 10% discount rate.

Uses proceeds to repurchase shares-what is value of firm : Marvin & Co. expects its EBIT to be $49,000 every year forever. The firm can borrow at 8 percent. Meyer currently has no debt, and its cost of equity is 11 percent. If the tax rate is 35 percent, what is the value of the firm? What will the value be ..

Capital structures-all-equity plan and levered plan : Genisys Corp is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 195,000 shares of stock outstanding. If Earnings Before Interest and Taxes (EBIT) is $800,000, ..

Unlevered cost of capital-what is the cost of equity : Larvey Co. has an unlevered cost of capital of 10.9 percent, a tax rate of 35 percent, and expected earnings before interest and taxes of $21,800. The company has $25,000 in bonds outstanding that sell at par and have a coupon rate of 6 percent. What..

User Account

All Pages