Firms residual or common value currently worth

Assignment Help Financial Management

Reference no: EM13911055

Suppose that a firm has, as of this year, an Earnings Before Interest and Taxes of $117 million, Depreciation of $10 million, has bought $25 million in machinery, has sold $12 million in old machinery for cash, has had an increase in Accounts Receivables by $3 million, an increase in (all) Current Liabilities by $4 million, an increase in interest-bearing Current Liabilities of $3 million, an increase in non-interest-bearing Current Liabilities of $1 million, has 7.25 million shares of common stock outstanding, has 1 million shares of preferred stock outstanding each with a par value of $35, and total long term debt worth $55 million. Also, this firm has a Weighted Average Cost of Capital of 12% and the firm's Free Cash Flows grow at a constant, annual rate of 6%. How much is this firm's residual, or Common value currently worth?

a. $413.38 million

b. $581.18 million

c. $804.91 million

d. $1,103.21 million

Reference no: EM13911055

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