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Market value of non-operating short-term assets

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Reference no: EM131074080

According to the value-based management model, what is the stock price per share given the following data?

Year

 

1

Revenue

 

700.00

Other income

 

25.00

Fixed costs

 

90.00

Variable costs

 

280.00

Additional investment in NWC

 

3.00

Additional investment in operating long-term assets

 

80.00

Depreciation

 

75.00

 

 

 

Tax rate

0.40

 

The free cash flow is expected to grow at 8% from year 1 to year 5 and 6% after year 5 to infinity. WACC comp = 20%.

Market value of the firm:

 

 

 

 

Price per share

Number of shares

Market value

Long-term debt

 

 

700.00

Preferred stock

7.00

10

70.00

Common stock, equity

15.00

100

1,500.00

Total

 

 

2,270.00

Market value of non-operating short-term assets=50

Market value of non-operating long-term assets=80

Select one:

a. $7.22

b. $8.54

c. $6.90

d. $9.97

e. $5.68

Reference no: EM131074080

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